Sompo Intl’s Brand: Pressure remains for casualty “rates and premiums to increase” in Europe
Sompo International’s president of continental Europe Ralph Brand has said that due to the region being “a little bit slower and less volatile, with more restrained market cycle swings”, pressure remains for casualty rates to be pushed a little harder.
But while he acknowledges this pressure, Brand told The Insurer TV he doesn’t think rates will increase as dramatically as they have done in other regions, so customers can expect a “more predictable and calmer” renewal period in the next cycle.
As a long-standing writer of casualty business before taking on his current role, Brand said the market is a “very dynamic place and ever evolving”.
“Whether it's a legal environment that is constantly changing somewhere around the globe or whether it's technology that leads to new liability exposures … there's lots of changes in dynamics in the casualty world,” he said.
“If I think about two major risks or exposures that are worrying me personally, then two things jump to my mind. One is the developments in the US litigation and legal environment around what is called ‘social inflation’, which results in an enormous increase in frequency of severity, losses, even nuclear verdicts and settlements.
“The other one is the unknown. You might still remember the asbestos scenarios and it took some time before it manifested itself to be a severe health issue. And so what else is out there that we don't know much about at this point in time? Is it microplastics? Is it opioids? Is it everlasting chemicals? I think these are concerns, not just to the insurance industry, but overall also to our customers,” he added.
On nuclear verdicts – which have been getting progressively worse in the US and are increasingly cited as an industry concern – Brand is confident we will also see more of these in Europe.
“We have seen those, particularly where our customers have investments in the US and operations there and then they're subject to the local legal environment and jurisdiction. And yes, we have seen significant and nuclear verdicts, also reaching the continent,” he said.
“I do believe though, that companies who have a heightened exposure, especially vis-à-vis the US, will have to take into consideration, not just potentially price increases, but also having discussions about the right attachment point level and the right limit deployment, in terms of the US exposures.”
Focus on Europe
Sompo International has a stated aim to become one of the top 10 P&C companies in the world.
As part of that, Brand said Sompo International will continue to explore more openings within continental Europe.
“We have been hiring a lot of top talent to the organisation, both in our regional office, as well as in the country. We have been granted a licence for Switzerland, which was a big milestone for us,” said Brand.
Last month the firm appointed Anna Lisiak as insurance head of claims for continental Europe. Herndon Stokes was also brought in to lead distribution and client relationship management for the region.
“We have been opening offices in Milan, Madrid and Paris. And we are also pleased with the level of business that we see coming in ever since we have opened those offices and hired those people,” emphasised Brand.
Despite all the progress, Brand still considers Sompo International to be at “the beginning of the journey”.
“But if I look back in the last 10 months, I'm fairly pleased with the progress that we have been able to make.”
Further hardening in the property markets should be expected, but “more stable”
Sompo International remains committed to the European property market, said Brand, though he acknowledges that the firm now spends more time on risk selection and customer conversations regarding risk management, mitigation and loss prevention.
And while “a lot” of Sompo International customers in certain territories have undergone significant re-underwriting in terms of limits, deductibles and prices, Brand does not expect wild price swings in either direction at this year’s renewals.
“I do believe that they should not expect a premium decrease, because we still see inflationary trends that need to be offset, in terms of values, but also replacement costs. But I think they should expect a more stable environment going forward.”
While it has been an especially stressful two years, Brand expects 2024 will be a “more predictable and calmer renewal period”, but one that plays to Sompo International’s strengths.
Watch this 14-minute video to learn more about:
- Where rates are headed for casualty lines and key risk areas
- Sompo’s growth strategy in continental Europe
- Industry concern around nuclear verdicts
- Sompo’s view on dynamics in the property market