The shape of the renewal season battleground

If you ask any re/insurance person about Monte Carlo, the answer in 2021 is usually the same: “it’s a shame that we cannot meet face to face this year; this is an industry of relationships; I miss sitting down to eat and drink with my peers”.

The pandemic, in closing some doors, has however left open some windows. Monica Cramér Manhem, president of international reinsurance and managing director at SiriusPoint, sat down on the Re/insurance Lounge, Intelligent Insurer’s on-demand platform for interviews and panel discussions with industry leaders, to talk about the opportunities and new ways of working that arose as the world shut itself away.

SiriusPoint is a relatively new reinsurer, having been founded last year with the merger of Sirius Group and Third Point Re. Cramér Manhem is responsible for the operations of its reinsurance business across the globe, with the exceptions of the US, Canada, and Bermuda.

An industry that has turned to electronic meetings has managed to find some opportunity in the maelstrom, she said.

“Everyone’s become more tech-savvy,” she explained. “It’s much easier to have Zoom calls or conferences over Microsoft Teams, and that means that there’s been better access to people. In the future travel will be much more thoughtful, which is positive from a sustainability viewpoint and for our carbon footprint.

“At the same time, it opens up new opportunities for more frequent meetings.”

Large losses at the top of the agenda

Asked if there would be a “battle” over renewals this year, Cramér Manhem said the use of that word was “interesting”.

“It’s a strange situation. Last year and this year, unlike previous years, we’re not meeting in Monte Carlo. And that’s been the start, for a long time, of the ‘school year’ when it comes to renewal negotiations and discussions. It’s where we’ve met with brokers, clients, and reinsurers to have discussions and take the pulse of each other’s ideas and aims,” she said.

“That’s not happened because all the meetings have been virtual.”

Several issues are high on her list of things to discuss. “The key areas of what we’re talking about today are what’s been happening in the reinsurance market when it comes to large losses and the catastrophic events we’ve seen in Europe, the US, China, and the rest of the world,” she explained.

“It’s very early to say what the discussion over rates and renewals will look like, but it won’t necessarily be a battle. I expect it to be more a meeting of minds. But it will be interesting.”

When it comes to severe weather events, the elephant in the room is climate change, a subject that has moved to forefront of the public mind in the last year, given events such as the floods in Germany, wildfires in Greece, and Hurricane Ida across the Atlantic. This, said Cramér Manhem, will cause the reinsurance to recalibrate.

“The frequency and severity of these losses mean that the evaluation and pricing of risk has to change, because we have to make price adjustments as a market, and as an industry, for the impacts on secondary perils arising from climate change.

“That’s going to mean re-evaluating pricing models and taking into consideration the consequences of climate change,” she explained.

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Market hardening

This, in turn, fits with Cramér Manhem’s view on whether the market is hardening.

“We’ve seen improvements in pricing in the last few years. But I think that how we need to look at 2022 is not just as a hardening market.

“When I look at what I’d say is a hard, or hardening, market, it’s providing increased rates and pricing for unchanged exposures. But what we’ve been seeing in recent years, and particularly in 2021, is a fundamental change in exposure. There’s been a dramatic increase in secondary peril losses in the world from flooding in multiple continents.”

SiriusPoint deals with brokers from around the world. Cramér Manhem returned to the idea of negotiations in 2021 and 2022 being a battle. It does not need to be this way, she said.

“When I speak with brokers they want to get the deal done. That creates opportunities for both parties, so it’s a question of being able to talk with each other in order to sort out what the expectations are and how to meet them.

“They obviously want to get the best deal, and will push for that, for their companies and clients. It’s a question of our being a catalyst in coming to a solution which is satisfactory for both parties.”

To view the full Re/insurance Lounge session click here