Price has to be right throughout the industry – Williamson

Everest Re COO and group head of reinsurance Jim Williamson said the reinsurance market is backing its primary peers to drive rate increases in the face of a dynamic risk market.

Speaking in Monte Carlo Williamson said the need for underwriters to be paid for the capacity and expertise they deliver and the exposures they assume was not simply an issue for the reinsurance sector.

“While the reinsurance sector is looking at the rates they charge I believe that we are also backing the primary insurers when it comes to charging the rating levels which recognise what they bring to their clients,” he explained. “The market is facing the issues of poor investment returns, a major uptick in inflation, and the issues we have seen around climate change. These are challenges that affect the whole industry.”

“Regulatory pressure is also a real issue in some territories and it is having a huge effect on the primary, market,” Williamson added. “It is not appropriate for governments to be telling insurers not to charge the right price for the risks they are underwriting,

“It will only lead to a withdrawal of capacity and a reluctance to write certain risks, which cannot be good for the market or the clients.

“We are actually now living in a riskier environment than we have done for many years and as such we need to have an insurance market where there is a willingness to encourage the transfer of risk and to work to mitigate risks, rather than be in a situation where restrictions on the price you can charge affects risk appetite.”

In the run up to the rendezvous brokers had warned there needed to be greater clarity and transparency in the reinsurance transaction as underwriters capacity in certain areas remained constrained Williamson said that he understood the need for clarity, adding it was something his company had sought to do through every part of the underwriting cycle.

“In terms of the brokers we have always sought to be transparent and look to write a broad portfolio of business,” he explained. “We have always sought to communicate quickly if our approach was to change to ensure that we can engage in a conversation to see how our approach might impact the broker and the primary insurers.”

He added: “I think the leadership of the brokers have been doing a fine job to explain the approach of underwriters and manage expectations. What we need to ensure is that understanding, and message is transferred down to the day-to-day meeting brokers are having with their clients.”

“We understand that some decisions on pricing may effect cedents whose economic situations are restricted in some form,” Williamson explained. “If that is the case, we need to look at how we can create a solution which uses other parts of the transactions such as limits or retentions to create a programme which meets the needs of all sides.”

“At Everest Re we simply want to be paid the right amount for the capacity and underwriting expertise we deliver.”