Indiscriminate rate hikes will open door to new entrants

Reinsurers that attempt to increase rates on programmes in Asia on the back of the recent catastrophe losses in North America risk losing market share to new or emerging reinsurance capital that has so far struggled to gain market share in the region, Stuart Beatty, chief executive, Asia-Pacific, JLT Re, told SIRC Today.

He said such a change reflects a growing willingness in the region to explore using new suppliers of capital, and these new market dynamics could open the door to them.

“The key difference between the renewals in Asia versus globally will be the benign loss activity in Asia as a region in 2017 year to date, versus that globally,” Beatty said.

“The influence the traditional reinsurers will have is significant and if they try to overly increase the premiums on the back of global events, it will influence the increase of new or emerging reinsurance capital from players who have previously struggled to get shares on programmes due to the dominance of the incumbent reinsurers.

“There is a growing appetite within the Asian region for reinsurance capital providers writing more Asian business and this renewal season could well see some changes on panels as a result, as compared with the last year or two.”

JLT Re has enjoyed solid growth in the region in recent years, and is optimistic that this will continue next year as it benefits from investments it has made in the region.

“JLT Re is seeing growth in 2018 in all the markets we are presently active in. Our near-term strategy is not to change as we feel our investment in countries around Asia will lead to continued increased engagement.

“Our focus is now on converting on these investments,” Beatty said.

“We have been investing in operations in country over the last five years and we are now licensed and resident in 10 countries as a reinsurance broker. We have completed that investment strategy and now are looking to grow our position and market share in 2018.”

He acknowledged that one of the challenges in the region has been the various regulatory changes in recent years. While these vary country by country, he said, JLT Re tries to be closely aligned with the respective regulatory environments and strategies in place and the resultant potential for market consolidation; increased trading in-country; increased reinsurance needs; increased minimum capital adequacy rules; or a blend of some or all of these factors.

“Regulatory change is prevalent across the region and this leads to opportunity for JLT Re.

“Reinsurance capital is a crucial component for a client’s overall capitalisation regardless of the country they are domiciled in,” Beatty concluded.

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