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EventsMonte Carlo 2023

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Cautious optimism and realistic discussions define North American market's renewal season, with transparency and strategic actions taking the forefront, says Everest's Jill Beggs.

There is a mood of cautious optimism surrounding the North American market as the renewal season discussions get underway, says Jill Beggs, head of North America at Everest.

This has been underpinned by strong growth of 20% in H1 2023, compared with just 5% in the whole of 2021-22. There have also been some significant shifts in the nature of conversations between reinsurers, cedants and their brokers, says Beggs: “The 1 January 2023 renewal discussions were still very dislocated but that has already started to change. For the April renewals it was a different sort of conversation, with clients a lot more realistic about what they can expect to achieve.”

There were some significant rate rises last year as the reality of sharply rising insured losses from nat cats hit home. From 2017 onward, the average annual insured losses from nat cat has been $110bn, more than double the average of $52bn over the previous five-year period.”

“The reasons for this big increase in losses were varied. Obviously, there has been an increased frequency. 2022 was the third-most-expensive hurricane season on record. We have seen major catastrophes moving beyond the obvious areas and hitting regions like California. There are also significantly elevated construction costs feeding into the losses.

“The need for the 1 January 2023 reset was very necessary, not just in the reinsurance market but in the primary market too.”

Everest’s response has been about much more than just increasing rates, says Beggs: “We have taken strategic actions to support the market. In particular, we have focused on building deeper client and broker relationships. At the heart of this is an emphasis on being transparent, fair and collaborative. Often this has led to us taking increased shares with existing clients.”

It is a two-way conversation, however, and when it doesn’t develop in the right way, Everest is not afraid to take difficult decisions. “We have cut back in Florida because we weren’t able to get the right terms and conditions to support what we thought was needed to build a viable programme,” says Beggs.

She expects this new mood of realism to create opportunities for reinsurers with the right approach, good capital and strong relationships with clients.

“There is a global flight to quality across the market and brokers and clients are looking for consistency, especially while wider market conditions and macro dynamics remain so volatile. Many cedants will be looking to broaden their panels to give them greater security. We have the additional capacity to deploy to support the right clients, especially those looking for new partners for property catastrophe risks.

“There is a lot going on and we need to stay nimble and be able to pivot quickly when disruptive events come along,” concludes Beggs.