Swiss Re said it sees a positive outlook for renewals as the market continues hardening and rates increase.
“Even before the COVID-19 crisis, most major markets were operating at below-average profitability,” Moses Ojeisekhoba, Swiss Re’s Chief Executive Officer for Reinsurance, said in prepared remarks. “To be able to address the growing need for insurance protection in a sustainable way, further price increases across all lines of business are clearly needed.”
The global reinsurer said it expects further hardening across all lines of business in the wake of rate improvements in loss-affected segments and other markets.
Swiss Re predicted the reliance on underwriting profit will increase as the low interest rate environment continues. Additionally, the reinsurer expects more opportunities for insurers and reinsurers due to a combination of improving insurance demand and growing exposures.
Other Swiss Re predictions for the upcoming renewals season:
- Prices will continue to increase due to lower interest rates and the need for prices to cover increasing loss trends as demonstrated by recent experience across the world.
- Hurricanes are frequently affecting areas where exposures have grown as a result of wealth accumulation. That means more severe losses, and 2020 will continue this trend in the midst of what is expected to be a record hurricane season.
- Expect higher frequency and severity of secondary perils, such as floods and wildfires, to continue, leading to rising claims that underscore the need for insurance protection.
- Against the background of ensuring pricing adequacy, underwriting fundamentals such as risk selection and costing, portfolio steering, appropriate terms and conditions, and contract wordings will be critical to writing future business.
- Expect stronger underwriting practices with a move to a more scientific, technology-driven approach.
Source: Swiss Re