Guy Carpenter reveals what could disrupt reinsurance renewals despite market stabilisation

The global specialty reinsurance market has stabilised after a period of disruption marked by sharp rate fluctuations, tighter terms and conditions, and rising attachment points, according to James Boyce, CEO of Global Specialties at Guy Carpenter, a global risk and reinsurance specialist.

Boyce notes that strong rating adequacy has been achieved across several business lines, with adequate capacity to meet demand in most areas, except for a few challenging segments.

He observes that the market is showing increasing consistency in coverage, and specialty reinsurers are performing well, continuing to uncover new opportunities.

However, according to Boyce, much of the recent market volatility stems from anticipated losses that have yet to fully materialise.

While the sector has experienced a few significant events, the large-scale financial impacts that justified many of the rate increases have not yet emerged in the market as expected.

Boyce stresses that the Russia-Ukraine conflict will remain a key issue for the sector as renewals approach. The market is also closely watching the impact of the Baltimore loss and the rising geopolitical tensions, both of which remain areas of concern.

Furthermore, highlighting that the upcoming hurricane season, predicted to be highly active, will be another critical factor in the market’s outlook.

As the renewal period approaches, Boyce expects buyers to push for coverage rates that better reflect their risk profiles and the improved performance of their portfolios.

According to Boyce, there will also be demands for greater consistency in policy wordings, improved terms and conditions, and more flexible attachment points. He emphasises that clients will place as much importance on the value of coverage as they will on the cost.

Boyce and his team at Guy Carpenter have already begun discussions with clients ahead of the renewal season. These discussions focus on reviewing current structures, analysing evolving risk profiles, and aligning with the clients’ outward reinsurance priorities to ensure a strategic fit.

He stresses that data will be key to aligning the needs of clients with the offerings of reinsurers, noting that recommendations for optimal structures will be based on in-depth analysis, comprehensive exposure modelling, and detailed market assessments conducted by Guy Carpenter’s specialist teams as they prepare for the renewals.

Boyce states that they remain fully committed to placing their clients in the strongest position possible to secure the best reinsurance outcomes in this evolving market.

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