QBE’s Harris: 1.1 rate environment to persist with further price increases possible

QBE International CEO Jason Harris has forecast the reinsurance market dynamics experienced at 1.1 will continue as 2023 progresses, with the potential need for additional pricing increases to counter inflationary impacts.

“What we need is a sustainable market that is appropriately priced. What we are seeing now will ensure we have a more resilient reinsurance market,” Harris told The Insurer TV.

During the interview Harris said this was ultimately a good thing for the reinsurance market.

“I don’t see an influx of capital coming in, so I expect to see a continuation of the 1.1 rate environment through 2023 as a minimum - these dynamics will continue as the year progresses.

“We may even look back at 1.1 and see the need for a little bit more price, once inflation and reinsurance costs are fully embedded into pricing models.”

“It's about being nimble, being agile and not being a slave to a plan - the world around us has got plenty of uncertainty,” he said.

Like many carriers, QBE increased its retentions for major cat perils this year amid a reduction in affordable cover for lower layers, with the firm now holding a group retention of ~$350mn for a major multi-divisional loss event from US perils, with divisional maximum event scenarios of $200mn for North America, $122.5mn for Asia Pacific and $100mn for international.

ESG transition

During a wide-ranging interview Harris also outlined the group’s ESG strategy, with QBE having become the first Australian insurer to sign up to the Net-Zero Insurance Alliance (NZIA) in February last year.

“I think there is an opportunity for all of us to think about how we integrate ESG more fully into our business strategies,” Harris said.

“As we think about E, S and G, it's important to remember it's not just about the E.

“A real challenge for the industry, particularly with what's going on around us in the geopolitical world, is to think about the S.

“I'm passionate that QBE is the insurer of transition in a just and fair way. I want to find a way of sticking with clients and supporting them through transition, because I think in doing so we will accelerate the journey to net-zero.

There'll be some periods of uncertainty over the next few years where sustainability might take priority and we will have to be nimble and thoughtful and consider what the right thing for the planet is.”

Watch the full 20-minute video with QBE’s Jason Harris for more insight on:

  • QBE’s thinking behind the $1.9bn Enstar LPT deal and what it means for the Australian carrier
  • The full impact of the 1.1 reinsurance renewal and Harris’ outlook on rates in upcoming renewal periods
  • QBE’s 2023 cyber growth story
  • Why 2023 is a “great year” to be an underwriter