Gallagher Re hails a ‘positive, healthy and exciting’ market

Despite the persistent fog of uncertainty, reinsurance capacity is flowing. That mix, according to Gallagher Re’s property and casualty practice leaders, is creating one of the most dynamic renewal seasons in recent memory.

Key points:
Uncertainty lingers, but capital flows
Reinsurers demand data-proven stories
New entrants energise global capacity

Speaking to Baden-Baden Today, Dave Egan, head of international property practice group, and Mathieu Loisel, head of international casualty practice group, said the current environment allows both cedants and reinsurers to rethink how they structure protection and deploy capital.

It’s been a long time since we’ve seen so many new players in the casualty space, and that’s an exciting combination.

“It’s a very interesting combination this year,” said Loisel. “There’s persistent uncertainty surrounding the whole market, but at the same time a very healthy inflow of reinsurance capacity, both from existing supporters – many of whom have growth aspirations – and from new entrants. It’s been a long time since we’ve seen so many new players, and that’s an exciting combination.”

Egan echoed that optimism on the property side. “It’s a positive and healthy market,” he said. “There’s a lot of capital to help our clients, and the supply is more than able to meet cedants’ demands. That means we can really focus on how clients want to protect themselves — how they manage volatility, retentions and exposures. It’s an exciting market to work in.”

Property: less dogmatic reinsurers

While rate softening is evident in parts of the property market, Egan said the dynamic has shifted from “holding the line” to a more nuanced dialogue between reinsurers and clients.

“This year reinsurers are less dogmatic. If we can convey the right story and provide the right data, they are willing to listen.”

He said reinsurers were increasingly open to a mix of excess-of-loss, aggregate, and structured products, depending on how cedants manage earnings volatility.

Egan added that despite a difficult start to the year with wildfires, catastrophe losses are running below budget. “Q1 was bad with the wildfires, but if we look at half-year and Q3 numbers, reinsurers are now seeing nat cat losses below historic averages,” he said. “That means they’re sitting on what looks like another very good year, particularly those with diversified portfolios.”

Climate-related volatility, he said, continues to drive demand for frequency and aggregate protections. “Climate change isn’t a short-term phenomenon. It increases volatility, and that’s where we can help clients manage their risk,” Egan explained. “We’re building models to understand secondary perils – hail, flood, convective storms – to improve how clients quantify and transfer that risk.”

He also pointed to emerging regulatory changes such as Italy’s new law mandating earthquake, landslide and flood insurance for all enterprises. “That’s been an exciting task for our modelling and actuarial teams,” he said. “We’re working closely with clients to understand exposures and reinsurance needs as the regulation phases in through this year.”

Casualty: social inflation, but steady confidence

On the casualty side, Loisel said two forces dominate pricing and capacity: US exposure and data quality.

“Reinsurers remain very sensitive to US exposures,” he said. “At the same time, there’s been an intensified focus on transparency and data. It’s not enough to tell a good underwriting story – you have to data-prove it. If you do, you can get healthy support and better terms.”

Social inflation and “nuclear verdicts” in the US, he added, have already influenced underwriting discipline internationally, though the European context remains different. “Yes, we’ve seen US-style claims creeping into international casualty markets, but Europe has strong mitigating factors,” he said. “We’re mostly under coded law, not common law. Collective redress and product-liability directives create uncertainty, but they come with established legal frameworks. We’re attentive, not panicking.”

Loisel stressed that capacity remains robust. “If Europe were facing a US-type situation, we wouldn’t have all this capacity coming in,” he said.

Climate-related litigation is also on reinsurers’ radar. “If you think of climate change and litigation, you instantly see financial lines — D&O exposures,” Loisel said. “But you can also imagine motor third-party liabilities losses arising from wildfires caused by cars. At the moment, the market is well-placed to absorb those. In the long term, though, climate will clearly reshape several classes of business.”

He also cited evolving EU directives on collective redress, product liability and motor (“use of a vehicle” definition) as crucial to watch. “What matters most is how these directives translate into national laws,” he noted. “Thinking global but acting local is essential.”

Emerging themes: AI, new risk classes

Both executives highlighted artificial intelligence as both a tool and a source of new risk. Loisel said AI “augments” rather than replaces underwriting and broking. “Before smart use of AI comes data federation,” he said.

Egan agreed: “AI should do the heavy lifting, pulling through loss and peril data, so we can focus on client-specific advice. It’s there to augment, not replace, our role.”

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