Rate cuts and consolidation worry all but the big cats

The continued soft market and the prospect of cedants seeking further rate cuts is the main thing keeping Baden-Baden delegates awake at night—or at least the respondents to an online pre-conference poll by Intelligent Insurer.

Half of all respondents said softening rates and the prospect of further reductions was their greatest concern.

“Original rates and terms and conditions have deteriorated to a degree that is not sustainable,” said one. “It takes time though to filter through, but the lack of organic growth and influx of new and fresh capital explains the consolidation and prevents the soft market turning.

“Cost-cutting and the drive to increase efficiency are not enough to compensate or prevent us doing poor deals at the front end. Historical low investment yields add to the problem.”

Their second biggest worry is consolidation and the effect this may have on the market and on their own companies. The third largest was cedants restructuring their programmes and simply buying less.

“When you take cedant cutback combined with tiering, some reinsurers will be getting less or no share in upcoming renewals,” said one.

Not all were so gloomy, however. An impressively optimistic 18 percent said they have few worries and business is good right now.

“I’m not worried,” said one respondent. “If you are the biggest cat in the jungle already, there is little to fear no matter how bad things get.”

What is your biggest challenge/concern this renewals season?