One eye on the future: why casualty underwriters need to stay on their toes: TransRe

Casualty rates may be going up, but it is too early to say if the rises will be enough, and if more are needed.

While the casualty reinsurance markets are broadly stable, with rate increases being made to reflect deteriorations in the tort environment in the US and a continued deterioration of reserves, underwriters must also keep one eye on future developing risks, if they are to remain profitable long term.

That was one of the observations of Keith Trigg, global casualty leader at TransRe, speaking in an exclusive video interview with Intelligent Insurer (click here to watch the full interview). He was being interviewed alongside Tom Loverde, TransRe’s US traditional casualty leader. 

Loverde noted that the  impact of emerging risks, the exposures of which are currently harder to assess. One of these that concerns him is PFAs, or per- and polyfluoroalkyl substances, a group of man-made chemicals that remain in the environment for a long time and which can cause a variety of health issues, and which are covered under a wide range of insurance policies.

 “It is possible to have double-digit rate increases and still have poor results.”

“There are many emerging risks that we have to keep an eye on; PFAs is quite high up our list in terms for risk. That is a characteristic of casualty business: you don’t always know what claims are around the corner; it is our job to handle any claims in an efficient and fair manner.”

Challenge for casualty underwriters

Trigg agreed but also acknowledged how hard it can be to be forward-looking in casualty insurance. “As casualty underwriters, we are charged with forward looking. But we’ve got so much going on we’re still looking back. The market is trying to do the right thing, it is just hard to know if we are at the right price level yet. If you look at this year in isolation, you can say everything looks sensible, but there remains heavy uncertainty from the prior years.”

Broadly, the interviewees felt that current pricing in the market  is keeping pace with trend. But they reiterated that underwriters need to stay on their toes.

“For 2025 alone, we feel quite comfortable that the rates being applied are in line, or possibly even slightly ahead of trend,” Trigg said. “The issue is that, as reserves develop, we don’t know where we’re starting from. We may not be ahead of the game. We’ve got the uncertainty in the backyard.”

“Responsible players are being careful not just on rates, but also on terms, conditions, and limits.”

This is making reinsurers a little more selective on the business they do write. Loverde noted that some reinsurers have pulled back a little. “Responsible players are being careful not just on rates, but also on terms, conditions, and ensuring limits and attachment points are where they should be. He added that TransRe has many quota shares with clients in the US, where a loss is shared from the first dollar. “But we can feel comfortable with that, because we’re all together. It’s all about who we’re partnering with, and ensuring the structure is fairly aligned for both parties.”

Trigg added that, especially in the US, rate increases are offering (re)insurers a feel-good factor. But the jury remains out on whether they will be adequate. “It is possible to have double digit rate increases and still have poor results,” he said. “It just can’t continue that way; there needs to be a wider fix. We need to solve the underlying issues.”

Thomas Loverde is the US traditional casualty leader at TransRe. He can be contacted at tloverde@transre.com

Keith Trigg is the global casualty portfolio leader at TransRe. He can be contacted at ktrigg@transre.com

Watch the full interview here.

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