Speaking to The Insurer TV as part of its #ReinsuranceMonth coverage at the Monte Carlo Rendez-Vous, Muir-Wood discussed the headwinds facing the reinsurance industry.

In addition to the impact of inflationary pressures, he said reinsurers should still take heed of a potentially active remainder of the 2022 Atlantic hurricane season.

“We are watching other factors which are going to affect how the reinsurance market behaves. It may be a very quiet season for hurricanes – we’re only halfway through if you like. There’s still time yet for hurricanes to form,” Muir-Wood said.

He added that October in particular is a period of “higher-than-normal activity” under La Niña conditions.

As Muir-Wood explained, La Niña is a weather pattern that occurs in the Pacific Ocean that brings expectations of heightened tropical cyclone activity, including hurricanes.

But he noted some of the weather factors that could make for decreased hurricane activity are difficult to predict, which is what has happened during this hurricane season.

“We have to admit there are other factors in forecasting hurricane activity. In particular, dust coming off the Sahara into the Atlantic, which actually can go against hurricane formation. And they’re very hard to forecast. So, some parts we can forecast very well, some parts are much less easy to forecast. Those are the ones that seem to have gone a bit wrong this summer and actually suppressed activity in quite marked ways,” he added.

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A two-month pause of named storm activity during this year’s Atlantic season came to an end earlier this month with the arrival of Danielle, the season’s first hurricane. It was followed by Hurricane Earl, the strongest hurricane of the season so far with winds reaching a maximum of 105mph.

Reflecting on the impact of inflationary pressures on pricing in the reinsurance sector, Muir-Wood spoke of the war between Ukraine and Russia as one of the catalysts for the spike in inflation.

“In particular, being driven by the secondary consequences of what’s happening in Ukraine, [inflation] is clearly going to be a very important factor for affecting rates for reinsurance actually set in the market this year,” he concluded.