Report from the reinsurance broker includes non-marine, terrorism, marine and energy, construction and engineering, aviation and aerospace, trade credit, bond and political risk.
Guy Carpenter has released a ‘state of the market’ report for specialty re/insurance business, focused on “securing a strong negotiating position” on behalf of its cedant clients.
The reinsurance broker, along with rival intermediaries and much of the global reinsurance sector, meets this week at the Rendez-Vous de Septembre (RVS 2024) in Monte Carlo.
In its report, “Global Specialties 2024 market update”, Guy Carpenter focuses on six market segments that are core to reinsuring specialty market insurers’ portfolios prior to the 1/1 treaty renewals, for which RVS 2024 marks the traditional starting gun of negotiations.
Each section of the report outlined the current market state-of-play, how these dynamics are influencing buying strategies, and which factors are likely to influence placement negotiations in the run-up to January’s renewals.
“The global specialty reinsurance market has entered a period of relative stability, following market upheaval characterized by significant rate movements, more restrictive terms and conditions, and upward shifts in attachment points,” said Guy Carpenter in its introduction.
“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.
The reinsurance intermediary emphasised that much of the market turbulence in recent years “has stemmed from predicted losses that have yet to materialise”. While the specialty sector has experienced “some sizeable events”, the broker observed that it had not seen catastrophic financial impacts – which it said had been the basis of a large proportion of the rate increases facing cedants and flowing through into the market.
“Undoubtedly, the Russia-Ukraine conflict will continue to loom large over the sector at renewal, the Baltimore loss will be keenly monitored, growing geopolitical tension will continue to be an area of considerable concern, and we await to see how the hurricane season plays out given active forecasts,” Guy Carpenter said.
“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,” the broker continued.
Preparing for 1/1 renewals, discussions with clients have already begun, Guy Carpenter noted, with existing structures, evolving risk profiles and outwards reinsurance priorities all up for analysis and, in some cases, realignment.
“Data will be core to achieving a strategic alignment between the requirements of our clients and reinsurers. Advice on optimum structures will be supported by comprehensive analysis, extensive exposure modelling, and granular market assessments by our specialist teams as the renewals approach,” the intermediary said.
“Guy Carpenter is committed to ensuring our clients are in the strongest position to secure the best possible reinsurance outcomes,” the firm added.
Click here to read the report and its conclusions for each of the six analysed specialty segments.
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