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PCI TODAY Tuesday October 27, 2015
Hardball-playing brokers guilty of prolonging soft market
the blame for the continuing softening of rates, Jean-Paul
C
ompeting brokers keen to get a better deal than their rivals should bear the brunt of
Conoscente, senior vice president
and chief underwriting officer at SCOR treaty underwriting, told PCI Today. “It is more the brokers that are playing
hardball than the clients,” he said. “Clients are mostly happy with the terms they have achieved and are interested in keeping long-term relationships going at the current terms. “The brokers are under threat and have to justify
their fees. They are the most aggressive regarding terms and conditions just to prove to their client that they can do a better job than a competitor.” Now, Conoscente claims, many of the leading
reinsurers are ready to say “enough is enough” and draw a line in the sand with regard to property/casualty (P&C) rates. “At some point you have to draw a line,” he
said. “Everyone agrees that we are as close to the bottom as we are willing to go.” This toughening of the line follows several
years of softening rates in the P&C sector. A combination challenging
of catastrophe-free years and a investment marketplace has seen
Jean-Paul Conoscente
some underwriters struggle to remain disciplined in such a challenging environment. “US casualty has hit rock bottom,” said Conoscente. “Commission levels are high already and room for additional commission is nil to very limited. On the property side, margins have been squeezed significantly by the capital markets.” Despite this, he foresees yet more woe in store
for the sector. He predicts further rate decreases of up to 3 percent in what has been another catastrophe-free year. (Continued top of page 2)
What’s inside
4 THREE INGREDIENTS FOR SUCCESS: TOKIO CEO
4 INSURERS WILL ENDURE ONE OF MEXICO’S WORST HURRICANES
5 IRRATIONAL SOFT RATES BUT BEWARE OF NEW RISKS: JLT RE
6 SWISS RE: CAN THE INDUSTRY AFFORD NOT TO EXPAND THE PIE?
7 BREADTH OF ENDURANCE OFFERS BLUE CAPITAL STABILITY
9 GUY CARPENTER SEEKS COMFORT ON INLAND FLOODING
10 COLLATERALISED MARKETS’ GRIP ON CAT BUSINESS GROWS
11 TIGERRISK BUCKS THE TREND TO ATTRACT MILLENNIALS
12 ENDURANCE’S DONELAN: ‘WHO IS HOLDING THE ILS BAG?’
14 FEMALE EXECS MUST LIFT EACH OTHER TO BEAT INEQUALITY
16 AON BENFIELD EXPANDS IN FLORIDA
17 PATRIA RE: ENORMOUS POTENTIAL IN LLOYD’S VENTURE
18 AWARDS: THE BEST OF THE BEST
Schultz defends broker role in prolonged soft market P
aul Schultz, the chief executive of Aon Securities, has hit back at the assertion that
brokers are facilitating the continuing soft market by putting their own interests in front of those of their clients and keeping rates suppressed. He was responding to comments by Jean- Conoscente, senior vice president and
Paul
chief underwriting officer at SCOR treaty underwriting, who suggested clients are basically
happy with existing terms and conditions and it is the brokers pushing for ever-better client deals. “I definitely don’t think you see that kind of
behaviour,” said Schultz. “The brokers are not putting their interests in front of those of the client.” “I don’t think that any one party is responsible for
the way the market behaves,” he added. “Markets tend to be efficient because if capital is priced inefficiently another part will be pricing it rationally.
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“Capital providers are making the investment
decisions at the end of the day. The role of the broker is to be an advocate for its clients and to achieve the best possible pricing and conditions in the marketplace.” Schultz added that
challenges facing the market, opportunities for growth would emerge as certain risks such as terrorism and flood, (Continued bottom of page 2)
DAY 3: Tuesday October 27 2015 | PCI TODAY | 1
despite some of the
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