Aon: Reinsurers seizing opportunity to lean back into property cat

Reinsurers are recognising the opportunity in leaning back into property cat following the rate rises and adjustment to terms and conditions that followed Hurricane Ian, according to Patrick Abbe, US regional and mutual strategic growth leader at Aon's Reinsurance Solutions.

Abbe told The Insurer TV that reinsurers were now comfortable with the margins that are currently being traded, with insurance companies “moving towards a state of healthiness”.

“Executive leadership teams at reinsurers recognise the opportunity in the property cat space right now in particular, and I think they're equipping their underwriters more than ever to be able to respond to that demand,” he said.

He said there continued to be healthy discipline from reinsurers around retention levels, with buyers “better prepared than ever” for upcoming reinsurance renewals.

“Demand is, at this point in time, matched with a strong supply of capacity. And when those things match, we tend to drive some pretty great outcomes for clients – and for reinsurers for that matter.

“Reinsurers are pretty excited to be growing in this market and we're happy to help them do that as well.”

Looking ahead to 1.1.2025, Abbe said one of the key topics of discussion will be the extent to which reinsurers are willing to provide sideways cover to help clients protect against an aggregation of retention losses.

“The good news is that, through two challenging renewal seasons, we see our clients better prepared than ever for their upcoming reinsurance renewals. And this demand is, at this point in time, matched with a strong supply of capacity,“ he said.

Casualty challenges

Abbe was joined in the interview by Dave Nicholson, head of global reinsurance clients at Aon's Reinsurance Solutions, who highlighted casualty as a more challenging area at upcoming renewals.

“We've heard a lot about property over the past two years. We're now going to be hearing a lot about the casualty market here over the coming months, as we approach 1.1.2025 renewal season,” he said.

Nicholson said the extent to which clients will face challenges placing casualty programs would be dependent on the results of their individual portfolio and the steps they have taken to manage exposures and push rate.

He said companies were continuing to focus on limit management and on navigating some of the tort challenges that are prevalent within certain jurisdictions.

Nicholson and Abbe highlighted Aon’s client segmentation model as one means to help clients navigate the current challenging casualty dynamic.

As Abbe explained, the crux of the client segmentation model consists of Aon taking “its data and insights, packing them, and delivering them to clients in an actionable form.”

As a result, the model helps customers keep up to date with emergent liabilities in the casualty space. For instance, Nicholson said it was helping clients manage their PFAS exposure, an exposure that Praedicat's CEO and co-founder Bob Reville has previously described as the largest emerging casualty risk.

“PFAS tools that are available – such as Praedicat, which we license for our clients to help them understand the risk in a deeper way – can help them stay ahead of trends” said Nicholson.

Watch the full interview with Patrick Abbe and Dave Nicholson to hear more about:

  • Q1 cat activity and the market response to rising severe convective storm losses
  • This year’s 1.4 renewal outcomes
  • Forecasts for a busy Atlantic hurricane season