Interview: Andy Caldwell, Barbican
Casualty reinsurance faces challenging environment
There are myriad challenges facing carriers of casualty reinsurance, as Andy Caldwell at Barbican told Intelligent Insurer.
business. That is the opinion of Andy Caldwell, divisional manager of non-marine reinsurance at Barbican. Caldwell says there is a big difference be-
C
tween motor and general casualty business, for the legal environment and the introduction of periodical payment orders (PPOs) in the UK.
“The controversy that has arisen around the way that LIBOR rates have been set is an issue that could become months.”
claims are settled, particularly large losses, and it has caused problems for reinsurers,” he says. - ation in terms of how claims are reserved and the implications for reinsurers. We’re fortunate that we’re not in the position that we’ve really got that much exposure ourselves, but could that change the dynamic of the casualty rein- surance market? Yes it could.” Meanwhile, the low interest rate environment is compounding these issues for reinsurers that have built investment earnings into their pricing. Any reinsurer that discounted their technical rates to allow for future investment returns will “It’s not an issue for Barbican, as we don’t discount our technical rate for investment in- come, it’s as simple as that,” says Caldwell. More general casualty business, on the other hand, faces a different set of challenges. On general liability business, while the perfor- mance of the sector has been strong the market is soft, and there are new entrants, particu-
asualty reinsurers face a number of challenges but they must focus on the
“We’re monitoring the situation very care-
outcome could be. It’s a situation that’s devel- oped very slowly over quite a long period of time. Because of that, insurers and reinsurers have been able to make certain provisions in terms of managing their exposures, but the extent of losses that might arise remains very uncertain”
“We may look to broaden the geographical base of the portfolio away from a concentration of exposures in the London Market.”
The controversy that has arisen around the Andy Caldwell, Barbican
“No-one really knows the extent of the likely reinsurance and insurance claims arising from LIBOR, but potentially it
larly MGAs causing insurers other problems, Caldwell adds.
of professional liability and D&O is complex. experience a continuation of relatively soft market conditions, he predicts. “We’ve got to be realistic in the assump-
tion that ongoing capacity in the reinsurance market in general is very abundant, and that it’s unlikely to bring about a change in market conditions any time soon,” says Caldwell.
insurance and reinsurance, he says Barbican has
6 | INTELLIGENT INSURER —BADEN-BADEN TODAY | Monday October 22 2012
way that LIBOR rates have been set is, how- in the coming months. It could prove a large driver for claims within the PI and D&O envi- says Caldwell. “No-one really knows the extent of the
likely reinsurance and insurance claims arising - cant,” he says. For the time being, Barbican’s expectation
is for continuing soft market conditions. If that position where it can quickly expand its capac- ity and broaden the base of its accounts. “However, at the moment we’re adopting a
relatively defensive position in anticipation of this continuation of the soft conditions,” says Caldwell. “We may look to broaden the geographical
base of the portfolio away from a concentra- tion of exposures in the London Market, where we are concerned about the proliferation of business being written through MGAs however that’s really dependent on the market environ- ment in other parts of the world.”
www.intelligentinsurer.com
22.10.12 MONDAY
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