Change is everywhere for reinsurance

18 September 2017

This year is set to be characterised by change, both within the reinsurance market and the wider macroeconomic and socio-political environment.

The peaks and troughs of the underwriting cycle have long been core features of the reinsurance market, and it looks as if the tide could be starting to turn once again after a prolonged period of prevailing soft market conditions.

Moderating capital inflows and growing reserve volatility (with some notable instances of reserve strengthening and evidence that the level of redundancies held by carriers is diminishing) are key trends driving this change.

At the same time, there’s been an uptick in attritional claims, with global losses returning to historical averages.

Effect of Brexit on reinsurance

External forces are also impacting market dynamics. In Europe, Britain’s decision to leave the European Union will have ramifications on Europe’s (re)insurance markets, especially London’s role.

Future cross border market access in the EU is in the hands of politicians now, with our industry strategists left guessing at the possible outcome.

Monumental change is also occurring across the pond, with policy changes suggested by the new Trump administration likely to have an impact on the US reinsurance landscape.

For instance, the competitiveness of offshore platforms could be seriously eroded if prospective policies around trade and taxes are enacted. European reinsurers writing USA inc. could also be hit by tariffs.

All this is playing out in a changing macroeconomic environment, with rising inflation expectations in the US, the UK, parts of Europe and some emerging economies potentially bringing implications for future reserve releases and profitability. 

A new approach to reinsurance

It’s hardly surprising that clients are beginning to cry out for a fresh approach from their consultants and reinsurance advisers in order to help navigate the challenging times ahead.

JLT Re’s investment in new technology and analytics, our global reach, and deep seated expertise in specialist classes, and our innovative and entrepreneurial approach, should position us well to meet the changing needs of our clients and a fast evolving marketplace.

Those that laud the status quo, focus internally rather than externally and fail to invest for the future, will find the waters ahead tough to navigate.

The old world order is evolving fast and I think the view from JLT Re in London and Europe is “bring it on”.

For further information, please contact Keith Harrison on +44 (0)20 7886 5308 or email keith.harrison@jltre.com

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