1/1 renewals will test industry’s relevance

In a new blog, Andy Marcell, CEO of Aon’s Reinsurance Solutions says the challenging headwinds as we approach the 1 January renewals are an opportunity for brokers and reinsurers to shine and show their relevance.

In it, he acknowledges that the reinsurance market has recently faced an increase in frequency and severity of losses but warns “we now face headwinds that present different challenges to our relevance and sustainability”.

”In certain lines and geographies, we have moved away from the fine balance of delivering cost-effective and efficient solutions that allow stakeholders to manage their risks within their risk appetite and provide acceptable returns to capital providers,” he continues.

”This mismatch causes friction and uncertainty. And while there needs to be a sufficient level of premium to generate returns for all stakeholders at the existing levels of capital, it is important that we continue to bring new capital to our industry to ensure a functioning, competitive marketplace for many years to come.”

As we approach the critical reinsurance renewals, clients are looking for:

• Their capital providers to offer them a level of certainty in an uncertain environment.
• To lock-in their cover in a timely manner and then move with confidence into 2023, seeking opportunities not just to grow their own business, but the businesses of their carriers. 
• Sufficient governance time for quotes to be reviewed and accepted. 

“Reinsurers that are demonstrating an understanding of client needs and a longer-term commitment to providing sustainable solutions in a consistent and thoughtful way are becoming more successful, and we are already seeing examples of entities raising capital in order to seize opportunities in the current environment,” says Marcell.

”We believe that the renewals period represents a time to move towards, not away from risk, and those that do so will be rewarded for their endeavors. In this relationship business, anyone that steps up to the plate will be remembered and valued as a true partner.

“This industry was built on the sharing of risk and reward, and if we work together this will continue to be the case.”

Brokers and reinsurers must be part of the solution, he continues. “We recognise the challenges many reinsurers face; however, those reinsurers that seize opportunity will be remembered as economic enablers for years to come.

“We need to be part of the risk management conversation; be the solution, as if we shy away from taking risk, we ourselves risk losing relevance as clients identify alternative, sustainable and consistent options to manage their exposures.

“We are the risk experts. We have been here before, but now is our time; let’s use it wisely as an industry to provide solutions that allow us to continue to grow our marketplace, innovate around new products, and meet the ever-growing needs of the global economic, interconnected world in which live.”