Ukraine may rip up reinsurance bundling, throw wrench in 2023 renewals

The war in Ukraine could lead to an unbundling of specialist reinsurance covers, bringing new levels of complexity and an upward burst to pricing once the January 2023 renewals roll around, London Market insiders have been suggesting.

War-driven losses focused on such lines as marine, aviation and terror could rip at the ribbons holding together larger bundled reinsurance products, analysts at the Berenberg investment bank said following talks with insiders at  Beazley,  Conduit Re,  Hiscox and  Lancashire.

“We think that the wider market believes that this can no longer continue given the increased outsized losses stemming from the war in Ukraine, which will ultimately result in the market having to separately price products,” analysts wrote in a note to institutional investors.

The upshot:  “a very interesting January 2023 renewal for specialty reinsurance” bringing “increased premiums demand and rates acceleration.”

Bundling may have been a product of the prior soft market cycle, a step taken by reinsurers to better compete for business and take up volumes by covering wider swaths of the market and broader geographies. The benefit of the construction may have dissipated long before the Russian invasion of Ukraine, analyst comment suggests.

Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.