Turbulent times ahead, warns SIRC panel

The future of the reinsurance market depends on its focus on sustainability and resilience during turbulent times, according to a panel discussion held at the Singapore International Reinsurance Conference on November 5.

The session, titled “Navigating a Sustainable Future Amid Uncertainty: Insights from Top Insurance Leaders”, was moderated by Clemens Philippi, chief executive officer of the Singapore-based Asia regional office of Mitsui Sumitomo Insurance. The panel included Dawn Miller, chief commercial officer, Lloyd’s; Achim Kassow, member of the board of management, Munich Re, and Matthew Carletti, managing director, Citizens JMP Securities. 

Philippi opened the discussion by acknowledging the significance of evolving market dynamics and inviting the audience to reflect on the market’s state over the past two years. Using the phrase “double double half”—a reference to rising attachment points, doubled excess-of-loss pricing, and reduced commissions—Philippi illustrated how the industry moved from a challenging phase to witnessing high returns on equity (ROEs) and record reinsurance capital in 2024. 

Reports from industry events in Baden-Baden and Monte Carlo depicted a cautiously optimistic environment, signalling growth but also highlighting the market’s inherent vulnerabilities. 

Looking back at back at this year’s Monte Carlo gathering, Kassow said: “When you look at the way the discussions are unfolding, I would say that there was a sensitivity to where will the market go.” 

He highlighted the persistent relevance of secondary perils—mid-sized natural catastrophe events that, despite being less severe than major hurricanes, significantly impact pricing and risk structures. Kassow emphasised that the market’s apparent stability was conditional on relatively benign hurricane seasons; smaller, frequent events continue to erode profitability and necessitate robust risk assessments. 

Managing the balance sheet

Carletti addressed the market’s strong position, citing high ROE levels and substantial reinsurance capital. He pointed out a strategic shift from simply insuring against volatility to managing balance sheets with a comprehensive approach. 

He explained how sustainable changes in homeowner policies, which reduced fraud and improved risk management, have played a key role in shaping market behaviour. This transformation highlighted the necessity of balancing competitive pricing with maintaining sound terms and conditions to ensure long-term market health. 

Miller highlighted the escalating significance of cyber insurance. She argued for the industry’s active engagement in public discourse on risk mitigation, stressing the need for collaboration with regulators to enhance resilience. Miller highlighted the cost of capital as a pivotal consideration, advocating sustainable practices that communicate the industry’s role clearly to policyholders, particularly when it comes to insuring high-risk areas. 

“While AI offers clear efficiency gains, it requires careful oversight to ensure fairness.” Matthew Carletti

Kassow agreed, focusing on the need for explicit policy wordings in cyber insurance to prevent exposure to systemic risks, such as potential “war exclusions” in cyberspace. He underscored the importance of attracting new capital and investor confidence by demonstrating a sustainable approach to risk and the necessity of a strong capital base to support long-term stability in cyber coverage. 

The discussion covered artificial intelligence (AI) in the insurance sector. Carletti detailed how AI-driven models were revolutionising underwriting and claims management, noting practical applications such as using satellite imagery for business verification and early issue detection. He stressed that while AI offers clear efficiency gains, it requires careful oversight to ensure fairness and accuracy in decision-making. 

Kassow added that consideration of the environmental impact of AI’s energy consumption was essential, advocating for its inclusion in business sustainability plans. 

Miller elaborated on how Lloyd’s incorporates AI to enhance service delivery, creating new business opportunities and streamlining processes. She highlighted the importance of cohesive messaging and cross-industry collaboration to leverage AI’s potential effectively. 

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