Hiscox Re will walk away from unrealistic clients

Hiscox Re is ready to walk away from clients with unrealistic expectations at renewals and is confident it can replace them with other business.

This is the opinion expressed by Nick Pascall, head of casualty reinsurance at Hiscox Re, who spoke to PCI Today.

He explained that as the January 1 renewals approach, the reinsurer is seeing margins eroding and unrealistic expectations from clients, who still think they can get the same rate cut they have done historically.

“This is the first renewal season for more than 10 years when we are potentially seeing significant moves in our portfolio,” he said.

He added that Hiscox is not predicting much growth for 2017, explaining that “we’re at the stage in the market where we’re going to work very hard to keep the book stable”.

“At the end of the year it may look as though things have only grown a little or remained flat but it will require a lot of work to remain stable,” he said.

Pascall added that commercial auto business has faced reserve deterioration and that the industry is now seeing opportunities as big carriers come out of the market.

“There is business out there that needs a home. But less than 10 percent of our book is commercial auto and I don’t see that significantly increasing. I’m not entirely sure some of these opportunities are as good as they might seem,” he said.

Hiscox Re is unsure that the rate uptick is enough for the company to take a significant step into the marketplace. Pascall says the company is not “ready to pull all of its chips into the sector”.

Ideally, the reinsurer would like to take on more healthcare insurance clients, something it has always grown its portfolio on. But this sector is also experiencing change.

“The healthcare clients we support have had some very good results and are buying less reinsurance while wanting to pay less for it,” said Pascall.

“Unfortunately, we’re seeing some longstanding clients’ reinsurance programmes fall below a certain price and so we have to part company with them, on good terms.”