No bright spots for reinsurers
The market remains tough for reinsurers,
with rate increases well below what
was forecast 12 months ago as an
abundance of capacity maintains pressure on
the market, Paul Ludwig, senior vice president
and client executive of the reinsurance division
of Munich Re America, told PCI Today.
Ludwig said that while there is a definite
momentum towards increases it is nowhere
near the level Munich Re would like to see.
“I’d characterise the market overall as tough
at the moment,” he said. “Rates are moving in
a positive direction, but maybe not as much as
we’d like. There’s a lot of capacity, particularly
on the property side, so despite the losses that
we’ve had earlier in the year and last year, there’s
momentum in an upward direction, but again
probably not as strongly as we would like.”
Ludwig pointed out that there’s a lot of
competition in the market, with some carriers
and reinsurers diversifying away from property
into casualty. The consequence of this has been
that rates in this sector have also been subjected
to some softening.
He added that in his view of rates, in some
cases, such as commercial liability quota share,
PCI Today Day 3 Tuesday October 30 2018
“Overall there are no really bright spots at
the moment,” Ludwig said. “Rates are moving,
but again, not as quickly as we would like. It’s
tough on the traditional reinsurance side at the
However, he pointed out that on the nontraditional
side Munich Re continues to partner
with clients and new types of companies in the
insurtech space to try and bring new models to
bear and also new products.
He describes this as one bright spot, albeit
one that he does not think moves the needle
in terms of premium volume or profitability,
because it’s more of a long-term organic play
“As an example, Munich Re has been
bringing to market a private flood programme
on the personal lines side as well as the
commercial lines side,” he explained.
“Basically through endorsements to
existing policies we will cover flood in the
US, which has very low take-up rates on the
“This is inland flood, small dollars, it’s
an add-on, but it’s a coverage that people are
becoming more aware of the need for.” l
AM Best develops criteria to assess innovation in insurers
The re/insurance industry is facing a
structural shift as a consequence of the
impact of technology, but not every
insurtech venture and vendor will be successful,
Stefan Holzberger, chief rating officer at AM
Best, told delegates at PCI yesterday.
Speaking at a briefing at the PCI conference
in Miami, Holzberger cautioned that there
were signs that the insurtech trend is showing
signs of being similar to the dotcom bubble.
“I need to be frank with you,” he warned.
“It’s possibly fair to say that there are bubbles
forming when it comes to innovation.
“The number of vendors and insurtech
startups and companies that the market is
talking to on a weekly if not a daily basis will
not all be around a year, two years, five years
“Everyone is talking about it as the next big
thing that will change our industry overnight.
It probably won’t, and at some point that
bubble is going to burst and a lot of these
insurtech companies and vendors will not be
He added that, similar to the dotcom
bubble, once the dust settles the industry will
see e-commerce become more prevalent and
potentially take a hold throughout the market.
“The point is that for us there’s a lot of
hype, there’s a bubble forming, but there is a
structural shift taking place in the industry.
The pace of change in the industry is different
from five, 10, 20 years ago,” he said.
In an effort to assess individual companies’
reaction to innovation AM Best plans to roll
out a set of new criteria to assess the level of
innovation in insurance companies, according
He said AM Best is planning to assess
innovation via a multi-stage process that should
be in place by the end of 2019, adding that the
rating agency will classify innovation as being a
widespread process within an organisation not
limited to technology, but which could factor in
a substantial amount of it. l
the commission levels are not commensurate
with the loss experience the market is expecting.
As a result, Munich Re is cautious on lines
such as commercial liability, particularly as
there’s a lot of uncertainty about claims trends
and where that’s taking the industry overall on
the primary level.