News


iven the political and socioeconomic landscape, insurers and reinsurers have


more things than usual to discuss at this year’s Baden-Baden meeting. This is the opinion of Jeffrey Kingsley, a leader in the reinsurance practice within the Global Insurance Services   He believes that, as usual, rates will domi-


22.10.12 MONDAY


Food for thought in Baden-Baden G


nate the discussions. But he also believes the intrusion of the capital markets via a number of vehicles including insurance linked securi- ties (ILS) will be a big talking point as will the outlook for the catastrophe market in general. “As the year wears on, the state of the catastro-


phe market will always prey on the mind. By Baden- Baden, the hurricane season will be almost over and we have an idea of the impact, if any, of that season  - tance as reinsurers seek to obtain return on invest- ment from a continuing soft market,” he says. Kingsley also believes that the European debt


Jeffrey Kingsley, Goldberg Segalla


  the world will be preying on the minds of insurers and reinsurers as will the continuing uncertainty over a clear timetable for the implementation of Solvency II for insurers and reinsurers operating within the European Union. But he says such challenges are not just con-       


the US also faces the possibility of a regulatory overhaul as a result of the long-awaited Federal       impending US Presidential election will be an- other factor to consider, and the outcome of the   changes that will be implemented,” he says. Man-made risks also represent a big uncer- tainty facing the insurance market. According to Kingsley, because they are not well under- stood, these are the biggest of all. “Cyber risk, FI and D&O losses from the


      terrorism and political uncertainty will continue to present major challenges for businesses around the world. There is no greater challenge for the insurance industry than to assess and evalu- ate intangible man-made losses that continue to evolve. The industry needs to identify and create new ways in which to model and price these new products accordingly,” he says. 


combination of a stagnating insurance market   better returns than is available in the wider investment markets at present means rates are not, in fact, moving in the direction they need to. That is the view of Christian Baumguertel, partner and senior account manager at Ger- man broker Koenig & Reeker. He notes four reasons rates need to rise: the huge losses that hit the industry last year from a number of nat- ural catastrophes around the world; the lacklus- tre results from most non-cat reinsurance trea- ties; hardening rates in the retrocession market; and poor returns on the investment side. “But as we saw in Monte Carlo, this does not seem to be the case. The simple reason is that there has never before been so much capi- tal employed in reinsurance. On top of that, the primary insurance markets are stagnating, bringing less premium into reinsurance treaties than anticipated while some insurers are also increasing retentions,” Baumguertel says. He notes that as there has not been a big loss


- tain the premium volumes coming in. But he does not believe players are willing to cut rates


www.intelligentinsurer.com


Rates are stable – but one event could change this D


espite many drivers suggesting reinsurance rates should rise in this year’s renewals, a


match to light the barrel: some windstorms in November or a large earthquake close to Christmas would change the dynamic in the market,” he says.     


says Koenig & Reeker is well placed to help cli- ents face the challenges ahead. “Not long ago, big was seen as beautiful in re- insurance broking. It was all about the analytics and actuarial support the big guys offered along with market access and power of client advocacy.    


Christian Baumguertel, Koenig & Reeker


to chase business just yet. “I don’t see much space for rate reductions, in particular not for treaties with an adverse track record,” he says. “Further, given the sur-        offer of capacity. So, my expectation is a side- ways movement on rates.” But he says it is still early with renewals be- ing negotiated later every year – and anything could happen. “It would only require one


  technical expertise and time devoted to clients to understand their requirements. It is about the quality, completeness and reliability of the  process incoming submissions, understand the business, analyse rates and conditions and do their underwriting decisions on a proper basis.”      


  reinsurance buyers but this is changing. “Mid-        comfortable with the independent advice and   


Monday October 22 2012 | INTELLIGENT INSURER —BADEN-BADEN TODAY | 19


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20