As issues continue to challenge the Florida insurance marketplace, Michael Stahel of LGT ILS Partners feels the upcoming mid-year renewals could be an optimal time to implement some needed changes.
We spoke recently with Stahel and Christian Bruns, both Partners and Portfolio Managers at LGT ILS Partners.
Speaking to the insurance-linked securities and reinsurance portfolio at LGT ILS Partners, Stahel explained that traditionally, the company’s allocation to Florida was rather limited.
“Again, our overall allocation to the US, it’s significant, of course. We’re talking 40 to 50% of our overall exposures that are allocated in the U.S., and also for U.S. wind.
“But, then again, in comparison to many of our peers that is a small allocation,” said Stahel. “And, so, we were able to be very selective, especially when it comes to Florida.”
Owing to the firm’s tendency to be selective with its reinsurance counterparties, LGT ILS Partners managed to avoid many of the challenges around Florida within its own portfolio.
“Already visible then, in 2017, were our allocation to an event like Irma and ultimately the impact from adverse loss development was minimal,” said Stahel.
“We do believe that this could be an optimal point in time, for the upcoming Florida renewal, to implement certain changes, certain amendments. And, just again to name one element that we really don’t like and we don’t feel it’s appropriate to pass that cost on to reinsurers, is loss adjustment expenses,” he said.
Further explaining, “We feel that, if you’re a large enough company and you have in-house legal counsel and in-house loss claims management people, that (LAE) is your running cost as a primary insurance company, that should not be allocated, as part of the loss, to the reinsurance and ILS community.
“And, so, that gives you one example where we believe we can improve, terms and conditions. Again, not focusing on the premium, but really making optimal use of the current hardening market situation, to remedy some of the concerns that our industry has had for many years.”
Hear more from Stahel and Bruns on reinsurance and ILS market conditions, as well as important topics such as climate change and ESG in the full video interview, which can be viewed below.
The full video interview is embedded below and can also be viewed in full, along with previous Artemis Live video interviews here.
You can also listen in audio to our interviews by subscribing to the Artemis Live podcast here.
This video was recorded in advance of our recent ILS NYC 2022 conference (read more about the event here), of which LGT ILS Partners was a kind sponsor.
For all enquiries regarding sponsorship opportunities please contact [email protected]