laure-forgeron-head-of-p-c-facultative-emea-swiss-re
Laure Forgeron, head of P&C facultative EMEA, Swiss Re
11 November 2021Insurance

Rate momentum continues and demand for re/insurance increase driven by loss experience: Swiss Re

Will carriers be able to secure the rate increases they have been looking for, even as the losses occurred this year bite?

Laure Forgeron, managing director and head of P&C facultative business in the EMEA region at Swiss Re, spoke to Intelligent Insurer to talk about where the market is heading prior to these renewals.

Rate adequacy has been a topic at the forefront of carriers’ minds as the reality of the losses from 2020 and 2021 have become clear, but the industry has secured several years of price increases in recent times.

“Over the last three years, on the primary side, we faced a hardening market. At the same time, facultative demand has increased to support portfolio de-risking of primary players. In 2022, we expect continued rate hardening, but with decreasing momentum.

“There are already early signs of slowdown that we can observe. We are also seeing increasing capacity in the market, as well as an increase of client retention in some cases,” she said.

Forgeron highlighted that while this may be the case at an industry-wide level, the EMEA region specifically was experiencing more diverse dynamics between different market segments.

“Specific to the EMEA region is that it’s very heterogeneous. We expect stronger rate improvement in property and financial lines compared to general liability. But it really depends on the market, the class of risks, or whether the account has been loss-affected.”

“We will focus on margins and quality to ensure that we build a sustainable portfolio.” Laure Forgeron, Swiss Re

Whither the market?

Given these dynamics, no-one is sure where the market is heading, Forgeron said.

“There is a question mark around the market outlook and how long the hardening observed in recent years will last, and how the recent nat cat events or manmade losses will affect available capacity—especially for heavy occupancy.

”Silent cyber exclusion is a key topic and at Swiss Re, we want to ensure that cyber exposure is affirmed and priced or excluded. Recent European nat cat events have certainly created momentum for the market sentiment to increase understanding, modelling and underwriting discipline for secondary perils.

“Finally, with regard to the observed frequency of large manmade losses, we have seen an increase in substantial events, notably in Germany. Rates need to continue to align with risk exposure,” Forgeron added.

Overall, the picture remains one of increased exposures for carriers as well as increased demand for clients, with the industry homing in on the need to underwrite profitably as exposures grow.

“Whether it’s facultative or treaty, we are seeing an increasing demand for insurance and reinsurance protection, accelerated by growing risk and trends ranging from climate change and supply-chain business disruption to urbanisation.

“We want to grow, and we want to support clients with our expertise and capacity by supplying swift and flexible solutions using data.

“We are at a tipping point in the market and, at Swiss Re, we intend to stay very disciplined when it comes to underwriting.

“We will focus on margins and quality to ensure that we build a sustainable portfolio through the cycle—thus continuing to support our clients in the long term,” Forgeron concluded.

Laure Forgeron is managing director and head of P&C facultative business in the EMEA region at Swiss Re.

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