With no cycle, reinsurers must raise the baseline of rates
Reinsurers must learn to manage prices in a more holistic way across the portfolio with a higher baseline in terms of what they will accept by way of a response to the disappointing increases in the aftermath of the 2017 catastrophe losses, Axel Freiboth, managing director, North America at Hannover Re, told PCI Today.
A year ago, Freiboth was expecting rate hikes in the aftermath of losses from hurricanes Harvey, Irma and Maria. These did not materialise to the extent the industry expected, and he believes the industry must adjust its perspective on rates and pricing in response.
“We are seeing a less pronounced cycle, there is no doubt about that now,” he said. “That has a lot to do with the influence of the ILS sector—the industry reloaded, refilled and proved they are dedicated to this market.
“In response, I feel we must lift the baseline of prices across the board. We did see increases, though not as much as we had hoped for, but we need to maintain realistic levels. After more mid-sized losses this year, I expect rates will be stable in the main with some increases on loss-affected lines.”
Freiboth said Hannover Re’s strategy in the US is simply to focus on servicing its existing clients well and growing in tandem with them. As a company, Hannover Re is wary of targeting growth in specific lines of business, preferring to work with clients across their portfolios, he said.
“Where clients are expanding they need support and reinsurance remains a desired commodity,” he added.
“On that basis, we are seeing steady growth across the board. We work with our clients to support them on their strategic objectives.”
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