Scor’s Léger: Reinsurers must address casualty issues next
While reinsurers have built back some credibility on nat cat, they must address the issues affecting casualty classes, including social inflation, in order to build market trust, according to Scor CEO Thierry Léger.
Speaking at the Guy Carpenter Baden-Baden Reinsurance Symposium, Léger underlined that the reinsurance industry must focus on the challenges dogging casualty classes.
“We have started to build credibility in nat cat. The next port of call is social inflation and casualty. Social inflation is not just in the US, it is certainly in Europe and will lead into Asia,” explained Léger.
Casualty issues have risen up the agenda both globally and at a European level.
Swiss Re’s head of P&C reinsurance for Northern, Central and Eastern Europe Thorsten Steinmann recently underlined how casualty – particularly in the US – is an area that “deserves to be in the spotlight”.
This is due to increasing awareness of potential liabilities related to per-and polyfluoroalkyl substances, along with social inflation and the growing impact of litigation funding in Europe.
And the Scor CEO reaffirmed how critical it was for reinsurers to effectively meet this challenge.
Léger remarked: “The impact of casualty is coming back to our lines of business. We have to show that we can deal with social inflation, show that we have the level of preparedness for this type of risk to come, and with this build trust.”
Speaking on the panel alongside Léger, Lloyd’s CFO Burkhard Keese also affirmed casualty’s importance.
Keese said: “At the moment it is US casualty that isn’t right as it doesn’t factor in this madness of social inflation and I believe we have to factor that in because it reflects price adequacy.”
He explained that Lloyd’s US casualty reserve has increased every year for the last five years by “2 to 3 percent”. Keese also expressed scepticism over previous decisions by carriers to give rate reductions in D&O and US casualty lines.
The Lloyd’s CFO also said that the Corporation’s pioneering transformer vehicle London Bridge 2 has a full pipeline and could secure an additional “$500mn to $1bn” of capital for entry into the Lloyd’s market by the end the year.
Keese outlined a number of other significant upcoming firsts for the platform, which included the launch of a listed vehicle, the launch of the first catastrophe bond via the London Bridge ILS structure, plus the news it is working on its first reinsurance-to-close transaction and its first stop-loss treaty placement.