The property reinsurance market “is very attractive for reinsurers at this point” given the current “relatively price adequate environment”, Fuller told The Insurer TV as part of #ReinsuranceMonth.
That adequate pricing environment continues to exist despite what Fuller described as “the influx of capital into the reinsurance and ILS space over the past 12 months”, which has caused the supply and demand dynamic in the sector to shift significantly.
And with the repeated price increases seen in the past four years, Fuller said there is a growing sense that some property reinsurance segments are now approaching rate adequacy.
“One example of that is Florida, where over the past four years or so rates have gone up roughly 40-50 percent,” Fuller said.
“In 2021, while that segment of the market did remain firm, the rate increases were relatively moderate and more in line with other segments of the market,” he said.
Looking to the 1 January renewals, Fuller predicted the biggest influence on discussions will be the impact of catastrophe losses, with a continued focus on secondary perils and any associated exposure.
On the casualty side of the market, Fuller’s colleague Chris Ross said three years of rate rises have shifted some insurers’ mindset from defence to offence, with their approaches to reinsurance buying changing and different structures increasingly being considered.
At the same time, Ross, Guy Carpenter’s managing director for casualty and Financial Lines Center of Excellence, said clients are considering retaining more risk over expectations of improved profitability.
“We’re starting to see a collective shift from a defensive mentality to an offensive mentality given the three years of rate increases,” Ross said.
He said there remains “clear dislocation” in some lines of casualty business, while there is reduced capacity and a more limited appetite in segments such as commercial auto, excess liability, public D&O, construction and cyber. But as Ross noted, there are also some “clear opportunities”, for example in the E&S market.
He said “more and more clients and carriers” are looking to his colleagues to help identify these opportunities and protect them going forward.
Ross also said there is more interest in loss portfolio transfers or adverse development covers to not only “wall off” prior year reserves, but also to help facilitate growth.
He also said clients “definitely” have greater appetite to retain more risk given their expectations of improved profitability, albeit with “a clear sense” of wanting to maintain their earnings volatility protection.
“We’re seeing a lot of discussions with clients and carriers about all the different types of structures – excess of loss, quota share [and] combinations,” he added.