Scor’s Conoscente: (Re)insurance industry must increase rates to ensure pricing sustainability

While reinsurance will slightly better its cost of capital in 2023, further rate increases are necessary to match rising risk exposures and ensure the future sustainability of (re)insurance pricing, according to Jean-Paul Conoscente, CEO of Scor P&C.

Speaking during Scor’s media briefing at this year’s Rendez-Vous in Monte Carlo, Conoscente underlined that rate increases will be required by both primary and reinsurance carriers.

“What we need is more pricing overall in the marketplace. Starting with reinsurance, but it has to be pushed down to the insurance level. The situation we’ve had for the past five years to 2023 was not sustainable for reinsurance,” explained Conoscente.

“I think the current situation, if it continues, will not be sustainable for insurance companies either. The only solution is for insureds to pay the appropriate price for the risk.”

Scor’s P&C CEO suggested the US primary market had accepted that rate increases were needed, but felt it would be harder to get this message through to European insurers.

Conoscente continued that reinsurance price increases would take place across all main lines of business and in all major geographies.

But he reaffirmed that, unlike elements of last year’s renewal, capacity would be available at the right price and the right level

Conoscente felt US casualty was one area where price increases were necessary as reinsurers were not being adequately compensated for the risks they were taking on.

Second was property cat, which Conoscente estimated would see rate increases in the “low-double digits”, down on the “40-50 percent” increases put through at 2023 renewals.

One battleground Scor’s media briefing unveiled was attachment points.

Scor CEO Thierry Léger explained that due to inflation, maintaining attachment points at their current levels would be a de facto reduction in limit.

And the CEO was bullish that Scor “has no appetite below the current attachment level”.

One option Scor has been considering, according to Conoscente, is indexing attachment points to the growth of a client’s portfolio.

Indeed, Conscente said there had been a mixed response from clients to this proposition, but he felt there was progress.

“We have made some progress. I'm not saying everybody's super enthusiastic about the idea. But I think the clients that are looking for stability as capacity over time understand the need to build a company that has the capital,” said Conoscente.