Soft market still a concern for renewals
The continued soft market is the biggest concern during this renewals season, according to respondents to Intelligent Insurer’s Baden-Baden 2017 survey, a response that shows that despite the heavy losses in the US in recent months, negotiations in Europe may not involve rate increases to the extent some would like.
Some 61 percent of respondents identified this as the biggest concern, with one noting that competition from inexperienced Middle East markets is affecting the market in the Commonwealth of Independent States (CIS) and Central and Eastern Europe (CEE) regions.
Many market observers believe that the recent US nat cat losses may trigger a hardening of rates. While a price hike seems likely in the affected regions, the international impact remains to be seen. Industry players are also watching with interest to see how the capital markets react to these losses.
Around 16 percent of respondents identified consolidation and the resultant changes to the reinsurance landscape as the top concern for this renewals season. In particular, Japanese re/insurers are looking to grow through acquisition—as in Sompo Holdings’ acquisition of Bermuda-based specialty insurance group Endurance, a move that lifted Sompo Holdings’ overseas profit between April and June 2017.
Buyers are not exclusively Japanese, however: Bermuda-based re/insurer AXIS Capital Holdings’ acquisition of Lloyd’s property/casualty underwriter Novae Group is another recent example, and further M&A activity looks likely.
Another concern identified by some respondents is that cedants are restructuring their programmes and buying less coverage: some 8 percent stated that this is a key issue during this renewals season.
Getting the right rates, maintaining relationships and finding areas for profitable growth were also cited as concerns.
What are your biggest concerns for the January 1 renewals?
The continued soft market with clients seeking further rates cuts 61%
Consolidation and the resultant changes to the reinsurance landscape 16%
I have no concerns: business is good right now 15%
Cedants restructuring their programmes and buying less coverage 8%
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