Lloyd’s warns on casualty reinsurance renewals: it’s the reset for 2024
Lloyd’s syndicates may be in for a reinsurance renewal on casualty books to mirror the mayhem in property seen just a year ago and need to get busy on pricing to get ahead of any pending cost shock, the corporation’s chief of markets Patrick Tiernan told underwriters in his Q3 market message.
“We need to be prepared to absorb any upwards pressure from reinsurance to maintain an orderly renewal and not lose out,” Tiernan said.
In terms of the reinsurance hurdle ahead, casualty has “an eerily familiar feel” to the property market of twelve months ago, he said.
Syndicates prepared “very well” in 2022 and 2023 for the reinsurance reset in property treaty renewals from January through mid-year 2023, Tiernan said. “We would like to actively encourage a similar approach on casualty for this season.”
But signs suggest that Lloyd's primary casualty business, dominated by excess market primary covers backed up by proportional reinsurance, is a bit behind the curve, Tiernan suggested. Pricing has remained “relatively subdued” even amid “upward claims pressure” driven by social inflation, i.e. rising court awards.
“As a market, we have not yet demonstrated the same zeal for rate adequacy in the casualty book as we had seen in property,” Tiernan said.
That concern is “particularly true” for the US general liability book “where rate is barely keeping up with inflation” not to mention the ongoing deterioration of the 2014-2018 years of account, he said.
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