Soft market worries (and too much meat)

Softening rates and terms and conditions will be at the forefront of the minds of the majority of attendees at the reinsurance conference in Baden-Baden this year—with several stressing that too much capacity chasing too little business remains a critical challenge for the industry.

That was the conclusion of an online pre-Baden-Baden survey conducted by this publication. Some 53 percent of respondents said softening rates was their biggest concern while 21 percent said the challenges of growth for the industry was the biggest worry.

“Reducing rates and widening terms and conditions is putting pressure on all parties within the re/insurance environment. It is important for the future of the industry that these pressures are discussed and lessened,” said one respondent.

Another explained that while these are the core pressures the picture is also more complex.

“You must consider the effect of insurers releasing reserves, the consolidation of markets, new capacity entering markets, which is not needed, but just too much money looking for somewhere to invest, plus other equally depressing subjects,” the executive said.

In terms of the search for growth, another respondent also painted a gloomy picture.

“Following many of the major mergers and acquisitions (M&A) we have already seen less reinsurance is being bought as the clients can absorb much more in the way of downside risk to their balance sheets. For many, major catastrophes now represent earnings events rather than threaten their capital,” they said.

Other respondents named alternative capacity, M&A and regulation as being big potential talking points while there were also respondents who were happy to admit their motives in Baden-Baden are more frivolous. Some 7 percent said their main talking point will be where to eat and entertain clients in the German town.

“I like the beer but, especially when it comes to entertaining our more demanding clients, the restaurants can be a little too traditional when we have North American guests here. The tapas bar is good but you don’t want to be entertaining a vegan too many nights in a row in Germany!” said one.

What will be the main talking points in Baden-Baden this year?