Early September means Monte Carlo, and its physical absence has created a big hole in the 2020 reinsurance calendar, in spite of the excellent virtual initiatives that have been created.
The problem is that its absence will create a real communications gap. The opportunity to informally have discussions with contacts who we might otherwise never see, is an invaluable oil in the wheels of major reinsurance and capacity deals across the market. That face-to-face interaction not only helps bring together ideas, allows capacity providers and backers to set up opportunities for new business ventures and structure complex reinsurance programmes; but it also gives everyone an opportunity to get real transparency over barriers that might hinder the signing of deals that are underway.
Monte Carlo gives a window to brokers to extend negotiations and to get the most difficult deals done, and its absence could exacerbate some of the existing problems in appetite for new business among insurers and reinsurers in the London market at present.
Meanwhile, we have also now undoubtedly arrived at a hard market. Within New Dawn Risk’s field, (the casualty and specialty market), this means the reinsurers are in control and will, to a large part, be able to dictate terms to brokers and cedants. For brokers this means negotiations will become more difficult and commission will undoubtedly also be squeezed. Cedants must expect that prices will be flat at best, terms will be tightened, capacity reduced and the number of exclusions increased.
Reinsurers won’t be pushed into deals that don’t tempt them. In 2020 they will have the option to walk away. All of this behaviour is reinforced, not just by hardening pricing, but also by the increased focus on deal scrutiny by internal management. New business is harder for reinsurers to get across the line internally, and we see this lack of appetite as being particularly acute in the treaty market. No one, it seems, is currently actively looking for new treaty business. All in all, this reinsurance season could be challenging for all parties, and we will be working hard to mitigate this for our clients.
Max Carter and Rachel Cohen