Climate change and cyber risks top worries for reinsurance executives
Climate change and cyber risks have reinsurance executives concerned about the future profitability and vitality of the industry.
They are seen as key roadblocks to profitability in the near term.
Major industry priorities they say should include technology development, diversification of risk along business and geographic lines, together with the need to foster more talent and acquire expertise.
These are some of the findings of the Reinsurance Market Survey — H2 2021 by Reinsurance News and Artemis.bm, “taking the temperature of the global reinsurance market”.
Other findings in the just-published document?
January reinsurance renewals will be faced with upward pressure on rates, a broad firming especially for retrocession and property catastrophe risks.
Meanwhile, nearly 55 per cent have concerns or are less confident at the (re)insurance industry’s ability to weather future challenges of a similar scale, considering what has happened during the pandemic.
The global reinsurance market survey also reveals that nearly 30 per cent of the top executives said that the most important drivers of reinsurance buying during the renewal period will be controlling catastrophe exposure; protecting earnings; capital efficiency and relief; a general de-risking; solvency management; and the risk capital to support growth.
Respondents to the survey include 7.2 per cent from Bermuda, 36 per cent from Europe, nearly 21 per cent from the US and nearly 12 per cent from Asia.
The majority of respondents have responsibilities for, or provide input to, reinsurance and retrocession buying decisions. More than 33 per cent were reinsurers, almost 24 per cent were insurers and more than 14 per cent were reinsurance brokers.
Reinsurance News and Artemis said that they surveyed their global readership of senior executives and industry participants through September and October, gaining fresh insight into what has been a uniquely challenging backdrop to this year's renewal discussions.
They said: “We also wanted to analyse market sentiment as 1/1 2022 approaches, against the mixed backdrop of rate increases and loss volatility.”
The respondents included hundreds of identifiable senior insurance, reinsurance and ILS industry executives, including 32 chief executives or partners, 17 chief underwriting officers, eight chief operating officers, chairmen, vice-chairmen, reinsurance buyers, senior underwriting executives, ILS managers, portfolio specialists and service providers.
Nearly 69 per cent were positive or neutral about the current renewal season and nearly 44 per cent of those who were looking for cover expected to need more than in the past — nearly 49 per cent about the same.
In terms of ILS capacity, nearly 45 per cent said that they would use about the same, nearly 30 per cent a little more and just 9 per cent will seek significantly more.
Key factors chosen by protection buyers under consideration when choosing a reinsurance counterparty included in this order: price, credit quality or rating and reputation.
Following on, buyers want counterparties to be able to offer large lines, and they seek some level of flexibility.