Interview: Aaron Coates, Barbican Syndicate 1955


A market at tipping point?


A busy start to the year means that a market turn is just one big event away, says Aaron Coates, property reinsurance underwriting manager of Barbican Syndicate 1955.


T


he unexpectedly high number of natural disasters around the world at the beginning


of the year is having a significant effect on the international property markets, and has done much to facilitate a change in direction for the market. That is the view of Aaron Coates, property reinsurance underwriting manager, non-marine reinsurance division at Barbican Syndicate 1955. “As has been widely publicised, the first half


of the year brought unprecedented catastrophe losses arising from the Japan earthquake and tsu- nami and the New Zealand earthquakes; these are in addition to the Australian floods, Cyclone Yasi and severe US tornadoes,” he says. “While no single catastrophe event has been a catalyst for overall market change, the general consensus is that the market is at the tipping point.” But while these events pushed up rates in


the affected areas, Coates expresses concern that rates in other areas have not followed suit. “Certainly, following these losses, our view


of risk has changed. We have seen positive rate movement in the loss-affected areas, but we were disappointed not to see the necessary changes made to the structure of many Austra- lian programmes,” Coates says. “The number and volume of catastrophe


losses in the last quarter of 2010 and first half of 2011 and have caused us to re-evaluate our view of risk across the world. This has been more evident in areas where we have seen a number of attritional losses, such as Australia. Our underwriting strategy going forward has


Aaron Coates, property reinsurance underwriting manager of Barbican Syndicate 1955


their relationship with attachment point,” says Coates. “For us it is attachment that is para- mount rather than rate increase and we will look to adjust our portfolio accordingly.”


“While no single catastrophe event has been a catalyst for overall market change, the general consensus is that the market is at the tipping point.”


been amended to reflect our new view of risk and consequently changes will be made to our portfolio.” The year’s events have led Barbican to in-


crease its focus on certain areas of the market. “We will be paying close attention to the more attritional, generally non-modelled, perils and


Aside from natural catastrophes, another


important issue for Barbican is the release of RMS’s version 11 of its European Windstorm model, which has again required Barbican to carry out some re-evaluation in terms of its Eu- ropean property book. “While we are yet to see the full impact of


4 | INTELLIGENT INSURER —BADEN-BADEN TODAY | Wednesday October 26 2010


the new European Wind model, we understand that it is likely to lead to some significant chang- es in average annual loss. Consequently, we ex- pect its introduction to stimulate some positive movement in rate,” says Coates. “In light of this and our focus on non-mod-


elled peril exposure we will be paying particu- lar attention to attachment level; we will also be looking to ensure we maintain an adequate price for the risk we take on. The overall effect of this is that we will be looking to optimise our portfolio in order to achieve the required balance and return. This is likely to lead to a degree of change in the make-up our portfo- lio but unlikely to lead to any real growth until the full impact of the model revision has been digested.”


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26.10.11 WEDNESDAY


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