Despite 1 January renewals being ‘orderly’, following the onset of the war, many specialty coverages ‘were excluded post-April’
Since Russia invaded Ukraine in February 2022, renewals in the specialty market have been “incredibly complex and challenging” - despite “robust capacity levels”, according to James Boyce, chief executive of global specialties at reinsurance broker Guy Carpenter.
Speaking during an online briefing on 7 September 2022, Boyce explained that the conflict between Russia and Ukraine, as well as “the spill over effects of sanctions on Russia”, have “impacted many of the specialty classes” – in particular, affecting aviation, marine energy, trade credit and war, terror and political violence.
War impacted picture
Although 1 January renewals for specialty business were “orderly”, according to Boyce, he additionally noted that “it’s been a different picture since the beginning of the conflict - despite robust capacity levels in each of these markets”.
He continued: “Renewals have been incredibly complex and challenging as reinsurers still face uncertainty as [to] the exposures and potential losses.
“Aviation reinsurers push for reducing coverages. Marine composite faced scrutiny on terror, political violence, aviation, war at April 1.
“On marine composite retro, these coverages were excluded post-April. The aviation markets or hull war risk is largely excluded from major risk itself, other than where embedded in general aviation.”
Boyce recommended “early engagement with markets” as a mitigating tactic to the challenges that “will persist around available coverage” – despite the fact that he also believes “capacity in specialty classes remains buoyant”.
He added: “Losses from Russia-Ukraine conflict are expected – [for] some classes, [it] will take some time [for losses] to be fully understood and resolved.”
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Renewals in specialty market ‘incredibly complex and challenging’ due to Russia-Ukraine conflict