Markel’s Paul Springman makes his 1/1 renewals predictions
Markel’s Paul Springman makes his 1/1 renewals predictions and reveals why he is cautious about emerging markets.
The 1 January renewals will see more capacity and a renegotiated terms and conditions (T&C), according to Markel’s executive vice president Paul Springman.
“We will undoubtedly see more capacity appearing at the 1/1 renewals,” he said. “And I think most reinsurers would prefer to negotiate their T&C rather than give up capacity. We’ll probably see a moderate relaxation of T&C and a small increase in seeding commissions.”
Springman pointed out that there was far less demand for reinsurance than ten years ago and far more supply than even 24 months ago.
“To be honest,” he said, “I would much rather be a buyer than a seller right now.”
“The beauty of the Lloydâ€™s franchise is that there are no licensing issues. This makes establishing ourselves in a new market much easier
Springman also sang the praises of Lloyd’s when GR spoke to him at the Property Casualty Insurers Association of America’s annual conference in Boston.
Commenting on Markel’s new Singapore office which is due to open in a week, Springman said that “having Lloyd’s present makes life a lot easier when thinking about new markets.”
“The beauty of the Lloyd’s franchise,” he continued, “is that there are no licensing issues. This makes establishing ourselves in a new market much easier.”
Springman revealed that Markel was researching opportunities in a number of countries currently, including China, Poland and India. However he was cautious about the potential of these markets.
“I know everyone is talking about Asia at the moment but China, for example, poses huge challenges. There is infrastructure and pollution to think about, let alone the fact that third party liabilities are a very small part of the market.”
“Those people that have charged into these markets and tried to bite off more than they can chew have got serious heartburn
He likened the challenge of entering new markets such as China or Central America to eating a 6,000lb elephant.
“You can’t just jump in and swallow that thing whole – you have to take one small bite at a time. Those people that have charged into these markets and tried to bite off more than they can chew have got serious heartburn.”
When asked about subprime, an issue that has dominated discussions since August, Springman believed that the resulting credit crunch would not have a lasting impact on the insurance and reinsurance industry.
He said that in the long-term, additional capital would flow back into the industry and the lasting impact would be minimal, although he did concede that there would probably be “some D&O suits and some review of lending practices in the future.”
“We could see a general slowing of the economy,” he concluded, “but a recession is unlikely at the moment, at least until there is a change in the White House.”