Insures need fresh tactics to overcome 1.1 reinsurance renewal barriers: Aon
Insurers heading into the 1.1 2023 reinsurance renewals may be forced to abandon their preferred track or structures and “think quite creatively” to overcome the many barriers to deals which reinsurers will bring to the table, top officials at the Aon brokerage have warned.
“This is not necessarily going to be a business-as-usual renewal,” Aon’s head of business intelligence Mike Van Slooten told participants in a briefing ahead of the reinsurance industry’s kick-off festival to the 1.1 2023 renewals deadline launching this weekend in Monte Carlo.
“You’re going to have to think quite creatively to secure the level of coverage you need,” he said. Reinsurers have stabilised earnings on rising rates, but squeamishness will make renewals a challenge.
Carriers might start from articulating a good story on inflation and how their books are protected, he suggested. Inflation will be the “big topic” that could force primary carriers into “some flexibility,” Van Slooten said.
“Consider all the forms of capacity that are on the market,” he added.
But inflation only appears to dominate the early negotiating positions on account of the summer’s skyrocketing monthly price readings. Inflation has not brushed the remaining frequency and severity concerns under any rugs, Aon insists.
“Inflation has dominated the headlines, but climate change remains a constant presence,” executive managing director Dan Dick told the panel. “Climate changes is going to come back into focus very quickly.”
Aon feels no clear indication how reinsurers will react to having had their capital levels cut by market losses in the first half. That should be just “accounting noise,” but “we are not entirely sure how that is going to play out,” Van Slooten said.
The major brokers speaking out ahead of Monte Carlo are starting to sound a bit nervous on renewal capacity for their clients. Aon joined Guy Carpenter in outright pushing reinsurers to see opportunity where they currently see risk.
Analysts at Marsh McLennan unit Guy Carpenter had used their pre-Monte Carlo briefing to encourage reinsurers to “lean into the market.”
Likewise, Aon’s executive managing director Tracy Hatlestad egged reinsurers on: “We see strong opportunities for growth and attractive returns.”
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