Across the reinsurance market, pricing has been rising in response to the losses of recent years, and the impact of Covid-19 has only intensified talk of additional rate increases being imposed at the upcoming 2021 renewals.
Low interest rates will put more of a focus on the need for an underwriting profit, while the attractiveness of potential reinsurance returns elsewhere around the world may impact the amount of capital at play in the Canadian market, Turner, who is senior actuary and managing director of reinsurance broker Beach’s Toronto, Canada office, told The ReInsurer.
But Canadian insurers should be assessed on their own merits as the country has not been impacted to the same degree by some of the recent industry trends.
“There are differences in the Canadian market. Certainly we haven’t had the same issues on the casualty side as perhaps in the US [and] we haven’t seen the large jury verdicts,” Turner said.
Canada, Turner explained, has not seen the broader spike in loss trends either.
“We don’t have the same issues, and we really do have plenty of reinsurance capital in Canada. We are attracting new entrants, and smaller entrants are growing and looking for business. There is a balance there and we think it is going to be a rational market at renewal this year.”
Turner said the renewal will also provide clients with an opportunity to highlight differentiation between their peers.
“The actions of the past certainly are going to reflect how reinsurers treat them going forward,” he said.
Reinsurers will want to know how insurers responded to Covid-19, and what measures have been put in place to manage and mitigate that risk, even if it has been at the cost of writing some business.
How the client has acted during the soft market of the last few years will also play a part, Turner said.
“If they’ve been deploying capacity responsibly - reinsurers want to see that and will support responsible players in the market,” he said.
Another differentiator is how well all companies’ various departments interact.
“How the underwriters interact with the actuaries, and how underwriters inform them of the potential of coverage changes, and changes in the general risk environment… are extremely important,” Turner said.