Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Renewals to see different dynamics across reinsurance risk tower: TigerRisk’s Gulbransen


At reinsurance renewals in 2022, there is expected to be a an overarching focus on achieving more sustainable pricing levels. But there will also be different challenges faced and outcomes achieved, depending on where in the reinsurance risk tower underwriters are focused, according to TigerRisk’s Head of North America, Wade Gulbransen.

wade-gulbransen-tigerriskSpeaking with Artemis, Gulbransen explained that the market may diverge, with capacity expected to be far more challenged for those lower down in the risk tower opportunities.

This comes on the heels of another difficult year of catastrophe losses and with 2021 another year when aggregates covers and retrocession are expected to be particularly affected, the divergence between lower and upper layers will also create opportunities for TigerRisk’s clients, it seems.

Discussing the renewal outlook for 2022, Gulbransen said that while people are largely bullish about the prospects for casualty reinsurance, on the property side the outlooks is more nuanced.

“On the property side, we’ve seen multiple years of cat losses since 2017, and there’s an emphasis on re-evaluating views of risk, and to get pricing and coverage to a level that creates a sustainable product over the long term,” Gulbransen explained.

As you’d expect, given the ongoing discussions across the market on the topic of inflationary factors, Gulbransen sees no let-up in these added pressures.

“I think we’ll continue to see a hardening of the market on the primary side and in property Homeowners and E&S Property. Some of that can be attributed to economic inflationary trends that are having an impact on the insurance industry,” he explained. “Those inflationary trends include but are not limited to materials and labour costs, there’s also social inflation – changing social attitudes and the force of public opinion that drive inflation of insurance claims beyond what would be expected.”

On the reinsurance side, capital and capacity will, as ever, play a role, but Gulbransen sees a divergence of renewal outcomes as likely, depending on the level in the risk tower, or return-periods underwritten.

He commented, “I anticipate property is going to remain much the same as we saw from the 6/1 and 1/1 renewals last year. We’ll continue to see increased pressure and less interest in lower layers or underlying aggregate programmes, which will be more challenging in the market, due to loss activity and the number of events clients have experienced in recent years.”

Supply of capital could slow the pace of rate increases in the upper-layers of reinsurance towers it seems, which aligns with what we’re seeing in the market for catastrophe bonds, where at these higher layers rates remain softer than they were a year ago.

“Market conditions will put pressure on pricing in the upper layers. Reinsurers are talking about moving up and keeping similar capacity, which will create more than adequate supply for the upper layers that stretch beyond the 1 in 15-year return period,” Gulbransen said.

But adding that, “There may be some pricing tension and increases due to increased exposures in total insurable value.”

Hence it is the lower layers of reinsurance programs and towers where rates may rise more, as capacity shifts upwards away from return-periods where loss impacts have been heaviest.

“When you get below the one in 15-year return period, we’ll see more pricing pressure and less capacity,” Gulbransen told us.

Which means renewals this season could require more structuring effort and as in recent seasons the focus on terms may also be elevated, meaning brokers like Gulbransen’s firm TigerRisk Partners will find their advisory services in demand once again.

“We do believe clients and markets will find common ground through structure change and pricing given the desire by clients to continue to buy volatility protection at lower return times,” Gulbransen closed.

Read all of our interviews with ILS market and reinsurance sector professionals here.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.