Securing a strong negotiating position

The global specialty reinsurance market has entered a period of relative stability, following market upheaval characterised by significant rate movements, more restrictive terms and conditions, and upward shifts in attachment points.

“Strong rating adequacy has been achieved across many business lines.”

That is according to a Guy Carpenter Global Specialties Market Update report published September 9.

It noted that strong rating adequacy has been achieved across many business lines, capacity is available to meet demand outside of a few challenged areas, and there is increasing consistency in the coverage available. Reinsurers have overall achieved a strong performance in the specialty sector, and the market continues to provide opportunities.

It also highlighted the turbulence in recent years, which has stemmed from predicted losses that have yet to materialise. “While the sector has experienced some sizeable events, we have not seen the catastrophic financial impacts—which have been the basis of a large proportion of the rate increases—flowing through into the market,” said James Boyce chief executive officer, Global Specialties, Guy Carpenter.

“The value of coverage will be just as important as the price.”

The report noted that the Russia-Ukraine conflict will continue to loom large over the sector at renewal, the Baltimore bridge loss will be keenly monitored, and growing geopolitical tension will continue to be an area of considerable concern. “We wait to see how the hurricane season plays out given active forecasts.

“Yet, as we approach the renewal period, buyers will have an expectation to secure coverage at rates more commensurate with their risk profile and reflecting the improved performance of the underlying portfolios. 

“They will be demanding more consistency on wordings, improvements on terms and conditions, and more flexibility on attachment points. The value of coverage will be just as important as the price,” Boyce wrote.

“As we prepare for the renewals, discussions with our clients have begun as we assess existing structures, analyse evolving risk profiles and look to align with their outwards reinsurance priorities.”

For more news from the Rendez-Vous de Septembre (RVS) click here.

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