Guy Carpenter’s Richard Hewitt says European reinsurance remains competitive, warning of difficulties for newcomers entering the market
European reinsurance is in good shape following catastrophe losses elsewhere in the world and presents challenges to new entrants. This was the view of Guy Carpenter’s Richard Hewitt, head of business intelligence for Europe, Middle East and Africa (EMEA).
He said new capacity deployed following 2017’s natural catastrophes had limited impact on the European market.
“In 2017 following Harvey, Irma and Maria, and in prior years extending back to 2005, we have seen that major catastrophe losses in one part of the world no longer tend to have a significant bearing on market developments in territories unaffected by the particular losses,” Hewitt told GR.
The first half of 2018 recorded the lowest insured losses from major cat activity in the last eight years. While typhoons and hurricanes have hit Asia and North America more recently, loss magnitude expected to be much lower than 2017.
Guy Carpenter expects global reinsurance capital to be at $462bn by the end of 2018, up from $427bn at the end of 2017, and Hewitt suggested it made for a buyers’ market.
“Our expectation from a European property cat perspective for the forthcoming 1/1 renewals is that based on current market dynamics it will prove a positive environment for reinsurance buyers,” Hewitt said.
Hewitt said Europe’s established players hold a secure position, relative to competing global hubs and new sources of capital. Continuing innovation was highlighted as key to keeping that status.
He said: “It is a highly responsive market and must continue to capitalise on its ability to innovate whilst delivering capacity at an attractive and sustainable price.”
Hewitt warned that the robustness of the current insurer/reinsurer relationships makes it difficult for new players to enter the European market – whether as traditional or alternative capacity.
“It makes it particularly challenging for newcomers to gain material footholds in the region,” Hewitt said.
“The market is populated by well-established players who continue to demonstrate their ability to meet evolving client demands.”