Losses may signal end of soft market
The major losses from hurricanes Harvey, Irma and Maria and the Mexican earthquakes will not only impact the results of insurers and reinsurers for this year, but highlight other non-cat lines of business that have been underperforming or that are price-challenged.
This is according to David Bigley, executive vice president, chief underwriting officer and head of global catastrophe reinsurance at Sompo International, who suggested that the underwriting results coupled with smaller reserves releases and a low interest rate environment will help to push the market into firmer territory.
Since 2011, global rates on line are off 30 to 40 percent and more in some places, according to Bigley.
“The baseline is much lower and I foresee a broader, global rate change,” he added.
While the market is changing and rates should increase, Bigley stressed that it should not change Sompo’s commitment to its clients.
“At Sompo International we expect market correction. It doesn’t mean the end of relationships, however. Relationships will matter in this marketplace, but it will be changing.”
Bigley also expects a significant increase in retrocession price year on year, driven further by the catastrophic losses.
He continued: “The question is how dependent are reinsurers on their retro? Can they execute their strategies in the same way if retro pricing goes up 25 to 35 percent, as the market is suggesting?
“At Sompo International we would say we are well positioned. We have experienced underwriters in all lines of business that we write to work through the market changes with our clients,” Bigley concluded.
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