Further rate reductions are possible: buyer
While the pace of rate reductions is slowing, there remain ample opportunities for buyers to secure better deals on rates alone and on terms and conditions, Mark O’Riordan, head of group reinsurance at UK specialist insurer Ecclesiastical, told Baden-Baden Today.
“I don’t think there is any question that the rate of reduction we have seen in recent years is slowing, which was evident from discussions with many of our reinsurance panel at Monte Carlo,” O’Riordan said.
“That said, given current market conditions, I think further reductions, albeit on a smaller scale, are still achievable, especially for non-loss affected business, and where the buyer can differentiate itself from the general market.”
He added that it will be interesting to see how recent and future M&A activity will influence the dynamic in the market as reinsurers look to maintain and develop the existing participations of the newly combined entities.
He also thinks the market conditions will remain favourable to buyers. “I would expect there to be continued opportunities for reinsurance buyers as we move into 2016. The challenge for us at Ecclesiastical is to balance those opportunities with our overall reinsurance philosophy of developing and maintaining long-term partnerships,” he said.
He said that Ecclesiastical continually reviews its overall reinsurance structure, shaped by its risk appetite, to ensure that it meets long-term requirements. And he stressed the importance of its reinsurance programme to the business.
“For us, reinsurance is a fundamental part of our business strategy, so access to long-
term, sustainable reinsurance, with a carefully selected panel of reinsurers remains a key focus for us,” O’Riordan said.
“At this stage our current programme continues to suit our needs best, particularly given the nature of our specialist portfolio.
We will of course make adjustments where necessary, but as we move into the renewal season there are no plans to make major changes for 2016.”
He added that in terms of challenges facing the insurer, with no immediate hardening in the insurance market on the horizon, the main challenge for specialist insurers like Ecclesiastical is to underwrite and obtain good quality profitable business in our core niche segments.
“We have taken some difficult decisions over the last few years about the areas in which we operate, all of which have had an extremely positive effect on the business and significantly improved our underwriting performance. For us, it is important we build on that momentum, and grow our business profitably in the current tough environment,” he said.
