Casualty reinsurers must push back on rates

There is genuine resolve on the part of casualty reinsurers not just to draw the line, but to push back on rates, Simon Bird, head of casualty treaty at Brit Global Specialty, told Baden-Baden Today.

Bird said that conferences over the last three to four years have starting to feel like Groundhog Day, with continual conversations about when prices are finally going to start to rise.

“There comes a time when people can’t just tread water and notionally pretend to make money,” said Bird.

“If we don’t start correcting our underwriting and our pricing now, there’s not exactly going to be a rush of failures—everyone’s too big and too regulated. But there is going to be a rush of red numbers.”

Against a backdrop of overcapacity and the resultant continued downward pressure on rates, Bird believes the industry is starting to find the will to seek change.

“I do see some genuine resolve on the part of reinsurers to not just draw the line but to push back a bit as well,” he said.

Bird cites one major casualty loss being dealt with in the London Market at the moment, stemming from a pipeline leak in Canada, which could result in a loss of between C$400 million and C$500 million. “It has extensively been placed in the London international casualty market as opposed to the energy liability market, so it’s not in Bermuda or somewhere like that,” he said.

“That loss in turn is extensively reinsured, which means the pain is felt just as much by the reinsurance community—if not more so—than the insurance community.

“That’s why I see my casualty treaty peers realising that it really is time to start pushing back a bit.”