There may be some competition amongst certain markets at 1.1, NewRe CUO, Herrenpoth

In the lead up to this year’s Baden-Baden Reinsurance meeting, we spoke to Dirk Herrenpoth, Chief Underwriting Officer of Swiss reinsurer and Munich Re subsidiary, NewRe, about what his general expectations are heading into the key January reinsurance renewals.

“A very frequently used word in Monte Carlo this year was equilibrium, indicating that supply and demand are well balanced,” he said.

“That would reflect our general expectation as well: that we are expecting a stable market when it comes to structures, coverages and price with nuances in certain regions.

“In some markets, there may be a bit more competition. Other markets may need to catch up a little bit, but generally speaking, especially when it comes to coverage and structure, I would expect a stable market environment.”

Staying on the subject of 1.1, Herrenpoth then discussed the potential impact that the severe flooding that hit Central Europe in September could wind up having on the January renewals.

“It’s early days to say because with flood losses it always takes a bit longer for them to develop,” he explained.

“First estimates show that it should be an event of two to three billion. My expectation would be that it will not be a market changing event, but it creates enough attention in a way that Europe has experienced a series of severe, nat cat events over recent years, which shows that exposure is there, potentially climate change induced, and that terms and condition and price adequacy are key to provide capacities to cover those losses.”

A notable topic across the industry seems to be the current evolving risk landscape for natural catastrophes across Europe. We asked Herrenpoth what challenges and opportunities this presents for re/insurers based in the region.

“An ongoing topic across the industry is so called secondary perils. It’s a question whether they are still secondary, because for some I think the loss expectation is even higher than for the primary perils, and how to make them insurable and keep them insurable, but also how resilience can be improved too,” he said.

“I think that there is a political task as well. I believe that is a key topic especially due to the obvious climate change. Events like flooding and hailstorms will occur more frequently and with a higher severity. I think societies and politics have to be prepared for that. I think reinsurance, or also insurance are not the first line of defence. Other things have to be put in place before insurance/reinsurance kicks in.”

Furthermore, Herrenpoth discussed which areas he hopes to see NewRe grow within throughout the next few years.

“We have seen a fairly steep growth of our book of business over recent years especially when it comes to property cat, but also in liability.

“Against the backdrop of a changing market environment, we momentarily feel that defending our current portfolio, protecting what we have, is a higher priority than growing into something new.”

He continued: “Saying that, there still is opportunity in the market, and we are not shying away from seizing these opportunities, but what we are now seeing is more competition in the market. Generally speaking, and that goes along with our message at Monte Carlo: While we have no specific growth strategy, we would seize opportunities if they arise – but with no dedicated ambition to grow our business.

“It is probably fair to say that we are a in a bit of a consolidation mode, because we have grown so significantly in recent years.”

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