Swiss Re predicts supply:demand mismatch in hurricane capacity

Explaining the hurricane risk outlook to Monte Carlo Today, Mike Mitchell (pictured), head of property and specialty underwriting reinsurance at Swiss Re, said that the increase in demand will be driven by the inflation that is flowing through into some insured’s valuations.

“At the same time, in traditional capacity, several players have pulled back from the space. The non-traditional sources of capital have also started to retrench somewhat. I think we’ll see a supply:demand mismatch coming into the North Atlantic hurricane space. This is going to be a quite interesting and challenging dynamic for everyone to absorb,” said Mitchell.

Swiss Re also sees a need for modelling adjustments on secondary perils such as flood, droughts, and storms because of climate change as well as urbanisation, growing populations and the accumulation of economic wealth in disaster-prone areas, but is expecting this to improve soon.

“We’ve definitely seen that the attachment point of programmes hasn’t moved up as quickly as the underlying exposure value of the last several years. Now that this has coincided with actual loss experience, that’s going to put pressure on reinsurance programmes to move up,” he added.

More generally on climate change, Mitchell said that the industry needed to figure out the right balance between being offensive and defensive in terms of adaption and mitigation, alongside the role the industry needed to play in finding this balance.

He added that decarbonisation was clearly a huge theme for the re/insurance industry.

“How can the industry best pivot to ensure we are putting our best foot forward from a sustainable underwriting point of view and also supporting the energy transition in decarbonisation in a more active way?” Mitchell asked.