Swiss Re’s Steinmann: Up to $5bn of additional EMEA property cat limit set to be purchased at 1.1

Swiss Re has forecast a sharp uptick in demand for property cat reinsurance at 1.1, with between $4bn and $5bn of additional limit set to be purchased in the EMEA region.

Speaking to The Insurer TV, head of property & casualty reinsurance for Northern, Central and Eastern Europe at Swiss Re Thorsten Steinmann said discussions will continue to focus on the rebalancing of risk between primary carriers and reinsurers.

Within the EMEA region, he said there will be a particular focus on property per-risk losses following several large fire events this year.

Steinmann said Swiss Re retains an appetite for property cat business, where he anticipates insured losses from natural catastrophe events will grow by 5-7 percent every year.

Like others, he highlighted the impact of secondary peril events. In Northern, Central and Eastern Europe, recent events include flooding in Slovenia, Storm Hans in Norway, and hail storms in Germany and Austria.

“We continue to believe property cat rates will continue to go up,” he said, citing the impacts of inflation and continued loss trends.

“Motor combined ratios in most markets in EMEA are well above 100 percent, so we expect rates to go up and ceding commissions to come down on the motor side.”

However, he stressed that Swiss Re will take a deal-by-deal approach. “When we look at loss-impacted programs, we look at what is driving the loss. We look at attachment points. Is it attritional losses, or is it one large loss? And we look at the wider relationship – do we have other lines of business with the client supporting the property line?”

Stable casualty capacity

Steinmann said the group was also looking to maintain “consistent capacity” to European casualty clients, where he also expected demand to increase.

“There are a lot of casualty lines, especially in EMEA, where we do have appetite, particularly general liability treaties. We also like well-priced motor business.

“We're a committed player in casualty. This is a stable line of business which deserves stable reinsurance capacity, and we aim to provide consistent capacity to our clients.”

Steinmann also highlighted renewable energy as a growth opportunity for the reinsurer.

“I think there is tremendous potential. Our Swiss Re Institute has estimated that investments in green energy will generate an additional premium of around $240bn by 2035. That's a big, big number – we will try to be part of that growth story.”

PFAS challenges

Per- and polyfluoroalkyl substances (PFAS) represent the most significant emerging risk within casualty, with a number of claims recently filed against major manufacturers.

Claims to date have predominantly been filed in the US, but Steinmann said settlements were also taking place internationally.

He said clients were responding with a broad range of actions, from exposure analysis to sub-limits and full exclusions for PFAS.

“This is a topic of all of the conversations we have with clients. I feel the industry is taking this issue seriously, but the accumulation potential is very substantial. We have to protect our balance sheet against this type of exposure.”

Watch this 14-minute video to learn more about:

  • Challenges facing the US casualty market
  • The future impact of PFAS risk on both the US and European markets
  • Where Swiss Re sees bright spots in the market
  • Predictions for growth in property cat
  • Overall growth opportunities in 2024