Global post-loss rate hikes expected
Recent nat cat losses will lead to rate increases worldwide, and not only on the loss-affected accounts, Bob Mellor, head of international property at MS Amlin, told Baden-Baden Today.
He stressed that the global nature of the reinsurance industry will ensure this is the case.
“We believe the rates are going to be increasing worldwide and on other lines of business—after all, reinsurance is a global business. It happens that the losses are concentrated in the US but it’s the same capacity that supports our clients wherever they are in the world, so with the losses against that capital we expect those prices to increase,” Mellor said.
He added that the Baden-Baden meeting has fallen at a good time for having these discussions.
“We’ve had the Harvey, Irma and Maria events but they continue: the California wildfires are also worthy of note, so with these added it is a commonly held belief that losses are going to be more than $100 billion,” Mellor said.
“At the moment, our number one priority is to focus on paying the claims. We are comfortable the claims will be within our tolerances.”
Mellor expects that alternative capital, especially the ILS funds based in the retro market, will also be delivering on claims, and then reassessing their position based on pricing.
“There is certainly a lot of capacity available but the key point is getting a return against that capacity. Whether that capacity will come back into the market for reloading depends on the pricing environment. I don’t think they will be enthusiastic if the returns are single-digit,” he said.
Mellor was part of Amlin before it was acquired by MS Amlin, and said the company is now experiencing plenty of exciting opportunities and developments.
“Now we are part of a very large group we have serious firepower, so we are excited about the future and in a strong position.
“We see opportunities in every market, and are very excited about what we can do—cyber, new products and of course working to understand and respond to our clients’ needs, as that is where the opportunities will come from,” he concluded.
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