Losses may signal end of soft market
The major losses from hurricanes Harvey,
Irma and Maria and the Mexican
earthquakes will not only impact the results
of insurers and reinsurers for this year, but
highlight other non-cat lines of business that
have been underperforming or that are pricechallenged.
This is according to David Bigley, executive
vice president, chief underwriting officer
and head of global catastrophe reinsurance
at Sompo International, who suggested that
the underwriting results coupled with smaller
reserves releases and a low interest rate
environment will help to push the market into
Since 2011, global rates on line are off 30 to
40 percent and more in some places, according
“The baseline is much lower and I foresee a
broader, global rate change,” he added.
While the market is changing and rates
relationships, however. Relationships will matter
in this marketplace, but it will be changing.”
Bigley also expects a significant increase in
retrocession price year on year, driven further
by the catastrophic losses.
“Relationships will matter in
this marketplace, but it will be
He continued: “The question is how
dependent are reinsurers on their retro? Can
they execute their strategies in the same way if
retro pricing goes up 25 to 35 percent, as the
market is suggesting?
“At Sompo International we would say
we are well positioned. We have experienced
underwriters in all lines of business that we
write to work through the market changes with
our clients,” Bigley concluded. n
should increase, Bigley stressed that it should
not change Sompo’s commitment to its clients.
“At Sompo International we expect
market correction. It doesn’t mean the end of
Nat cat losses are an opportunity to prove resilience
Recent nat cat losses are an excellent
opportunity for reinsurers to demonstrate
their resilience, responsiveness and ability to
pay claims, according to Ian Wicks, chairman
of non-marine reinsurance, and Robert
Wildbore, director, reinsurance, at Ed.
They argued that reinsurers and the
insurance-linked securities (ILS) sector alike
can prove their worth in such circumstances by
responding quickly in terms of paying claims
and by ensuring adequate capacity is available
to clients to move forward.
“This is a time for the whole market sector
to respond positively, and an opportunity for
the ‘alternative’ sector to bed themselves in,”
said Wildbore. “It’s an opportunity to pay, to
reload if appropriate, and to show their value.
“Meanwhile, the traditional market is
resolute and strong and ready to step up, and if
you are willing to pay the price for the risk the
capacity will be there.”
Regarding the possibility of rate increases,
Wicks was circumspect.
“Each case will be dealt with on a clientby
client basis; I’m not convinced the rates on
everything are going up.”
He added that the robust companies that
are able to cope with the losses better than
some will see this as a chance to advertise their
“Swift paying of claims and good behaviour
is something for them to trumpet, and I think
most people are viewing it as such,” he said.
Wicks added that for Ed, too, the current
situation is a valuable opportunity.
“Just as this presents an opportunity for
the carriers, it presents opportunities for the
intermediaries and the more creative brokers,”
“Steve Hearn is trying with Ed to create
a company that, when it comes to client
relationships, behaves like a much smaller
broker. The closer you can get to understanding
the issues that affect your client the better.”
On the subject of technological innovation
within the industry, Wicks and Wildbore
agreed there are opportunities here, too, for the
“We are in a very good space to take
advantage and play our role,” said Wildbore.
“You need to be adaptable and flexible to
deploy technology and to move quickly with
“The investment we are making in
technology recognises the way the market
is going, and recognises the importance of
relationships backed up with cost-effective,
frictionless ways of doing business.”n
Robert Wildbore Ian Wicks
12 | BADEN-BADEN TODAY | DAY 3: Wednesday October 25 2017 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com