More competition expected at Jan. 1 reinsurance renewals

ORLANDO, Fla. — Robust reinsurance industry capital is likely to lead to increased competition at Jan. 1 renewals, panelists said Monday.

Meanwhile, so-called “secondary perils,” including wildfire and severe convective storms, continue to challenge property negotiations as the casualty side deals with adverse development.

Property talks should be more competitive, panelists said at the annual meeting of the American Property Casualty Insurance Association.

“There’s an awful lot of capital availability, which is going to stoke some greater levels of competition, I think, especially on the property side,” said Robert Jones, treaty North America manager-regional and specialty companies for Gen Re Group.

Cedents should see increased bargaining power, said Kathy McCann, managing director and U.S. deputy segment leader at Guy Carpenter & Co.

“Global reinsurance capital is obviously at a record high, and I do think that abundance of capital obviously means that cedents are coming to the market with more leverage than they’ve had in years and years,” Ms. McCann said.

Losses from severe convective storms and wildfire, however, are drawing increased scrutiny.

“These so-called secondary perils, like wildfire, convective storm and flood are no longer secondary. They’re producing outside systemic losses, and they’re so much harder to model,” Ms. McCann said.

“Secondary perils” have constituted some 60% of recent global natural catastrophe losses, said Jill Mraz, business development executive, Munich Re U.S.

“It’s astronomical,” she said.

The casualty side of the business is more challenging.

“A real concern is what’s going on with U.S. casualty business, especially the continued adverse development of recent accident years,” Mr. Jones said.

“We’ve made major reserve adjustments as an industry,” he said. “Everyone focused on 2019 and prior years, and now it looks like 2021, 2022, which are still pretty green years, are also developing unfavorably.”