Casualty at the 1.1: how primary underwriting trumped reinsurer alarm

Primary casualty carriers quietly turned the tables on their reinsurers at the 1.1.2024 renewals, countering reinsurer alarm bells with strong portfolio management to fend off calls for a market reset in the segment, top leaders at global reinsurance broker Gallagher Re have related from the 1.1 negotiations. 

“What was advertised in advance, perhaps not correctly, as a big problem area turned out to be less of a problem area than anticipated,” James Vickers, chairman of Gallagher Re International, told a recent podcast audience. 

“So what looked at one point like a requirement from reinsurers for a structural change to that market, ended up with a few points of ceding commission, if at all,” Tom Wakefield, global CEO for Gallagher Re, concurred. 

Reinsurers had launched the casualty segment lament in earnest from the Monte Carlo reinsurer soiree, with what Vickers now calls “a huge amount of talk.” Most frequently, social inflation, litigation financing and jury trends multiplied by pandemic court delays was said to equal an explosive mix rendering to-date reserves inadequate and current pricing thin. 

“In reality, what shone through was that the clients had done an awful lot of work on their underlying portfolios, whether that was increasing deductibles, shortening limits, increasing premiums,” Wakefield said of tone by the time negotiations started in earnest. 

Against the talk, Vickers saw a host of cedants “very confident in their original underwriting and all the remedial action they've taken, that they've done for the last three or four years.” Those players were “happy to retain a bit more” if the market didn’t deliver the terms they sought, Vickers said of negotiations.  

By the bottom line, US general third party liability XoL rates on loss free accounts held their rate gain to the single dingle digits on loss free accounts while ceding commissions on quota share business were down 1.5% to flat, Gallagher Re had said in its initial report from the 1.1 renewals. London market casualty/injury XoL rates were called flat on loss-free and quota share ceding commissions were said flat to down 1%. International general third-party liability XoL rates were flat to up 5% with quota share ceding commissions said to have been flat on average. 

“So I would say reinsurers will probably look back and think they didn't get what they were looking for on the casualty renewals,” Wakefield quipped.

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