Swiss Re expects growing demand for reinsurance protection to be a key topic of discussion at the 2024 Rendez-Vous de Septembre.
As it has been noted, there has been a growing demand for protection in property and specialty lines driven by elevated natural catastrophe risks, macroeconomic instability and politically charged environment
Urs Baertschi, Chief Executive Officer of Property & Casualty Reinsurance, Swiss Re said: “The key topics for the industry remain largely unchanged from last year, but the challenges have intensified, leading to higher demand.
“Faced with elevated natural catastrophe risks, economic uncertainty and geopolitical instability, reinsurance is the natural way for insurers to protect themselves from outsized losses. We are ready to support our clients with our capital, expertise and solutions.”
Higher property values, urbanisation and inflation-driven repair costs are expected to drive demand for property re/insurance, especially in areas with intensifying natural catastrophe risks.
According to the Swiss Re Institute, 2023 was the fourth consecutive year with global insured losses from natural catastrophes above $100 billion, and 2024 is following suit with H1 insured losses already at $60 billion, 62% above the ten-year average.
On the positive side, Swiss Re affirms a growing demand for re/insurance in engineering aligning a positive outlook for the construction industry, especially for renewable energy projects.
Swiss Re supports the green energy transition by launching a Centre of Competence for Renewable Energy in 2023 to cater to clients with expertise and products in managing their renewable energy portfolios.
Some other key points of the talk at the conference are refined data and modelling, optimised capital management and in casualty, the elevated litigation environment in the US is a growing concern for the industry.
The cyber re/insurance market is primed to continue its growth trajectory driven by a rise in awareness of both the frequency and sophistication of cyber attacks following several incidents this year. However, managing accumulation risk will be critical to allow efficient capital allocation.
In the US, liability claims growth has outpaced economic inflation over the last decade, according to the Swiss Re Institute, due to a growing number of large court verdicts with no signs of the trend slowing down.
In 2023 there were 27 cases of courts awarding more than $100 million in compensation, based on current trends, the impact of claims growth will outweigh the benefit of higher interest rates on casualty lines in the next few years which could cause available capacity to drop further.
Looking at forward-looking risk assessment and capital management, adequate risk views and volatility management are important requirements in an uncertain environment, says Swiss Re.
An important prerequisite for modelling improvements is the effective data flow through the risk value chain. As perils arise or intensify, accurate and timely data is essential to recalibrate models and provide forward-looking scenarios that enable risk-adequate pricing.
This can be achieved through an expert-led conversation across the insurance value chain. Beyond risk transfer, insurers are turning to reinsurers for value-adding insights and solutions that can help them better understand and mitigate risk, unlock innovation and improve performance.
Capital and volatility management are further immediate concerns for insurers, especially given the current economic uncertainty. In this regard, structured reinsurance solutions can protect to smooth out volatility and support growth plans by improving capital management efficiencies.
Gianfranco Lot, Chief Underwriting Officer of Property & Casualty Reinsurance, said: “The insurance industry has shown time and again that it can rise to the challenge of a rapidly changing risk environment.
“To further progress as an industry, we need to leverage data better to predict future risk without being too anchored in the past. As a reinsurer we want to be a facilitator for our clients, helping them achieve greater precision to manage what’s ahead of us.”
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