BMS Re’s Watkins: Shifts in attachment points don’t devalue reinsurers’ proposition

The upward shift in attachment points that has become a mainstay of recent reinsurance renewal discussions won’t detract from the bigger value proposition reinsurers can offer, according to BMS Re managing director Hannah Watkins.

Speaking to The Insurer TV in Monte Carlo, Watkins said there was a “large disconnect” between the market and clients’ expectations during last year’s renewal season.

The situation was further complicated by the “carte blanche approach” taken by some markets, including with long-standing clients.

“Insurers have been buying reinsurance for an awfully long time, raising deductibles and the cost of everything continues to increase, inflation continues to increase, and therefore, over a period of time, naturally, your market's attachment point will rise,” she said.

“But I do feel that there was quite a large disconnect between the market and the clients' expectations at renewal last year,” Watkins added.

“And it's tricky, because there was a carte blanche approach by some markets, even with long-term clients. And I think that was difficult for some of those clients to swallow. So I think there will be some communication and discussions around that, whilst we're here in Monte Carlo.”

While Watkins felt the term “damaged” was perhaps a bit too strong when discussing client relationships, she said that dynamics are not “nice and neat” anymore, and that this has been the end of a “one size fits all” approach.

“This is where brokers come into their own,” she said. “This is where we prove our worth and demonstrate our craft, and we're meant to be an intermediator, that's what we're here for.”

She added that brokers will also be able to provide solutions around the main program.

Alternative solutions

In this new cycle for brokers, Watkins noted that BMS Re has been providing clients with alternative solutions when traditional reinsurance is not available.

“You want to provide your client with a choice, you don't want to sit there and go, there is nothing else out there. We are very much working across traditional and non-traditional spaces,” she explained.

She added that BMS Re’s recent expansion into Bermuda has emphasised the importance of looking beyond the traditional reinsurance sector.

As such, BMS Re is now offering solutions to clients across D&F, treaty, retro and the ILS markets. “You have to make sure that your clients understand the different triggers compared to traditional reinsurance, that's hugely important,” she explained.

“We definitely haven't stood still,” she said. “And I think neither should we. We're constantly evolving, we constantly want to improve, we constantly want to enhance what we're offering our clients.”

The conversation also turned to market conditions. Away from the property cat market, Watkins spoke of the changes the specialty market went through in 2022 and predicted further adjustments in the future.

“It will be on the terms and conditions,” she said. “There was a lot of disparity and there was no consistency in clauses last year, so people will want some more clarity on that.”

She added: “There are unknowns in that space and the market wants more clarity around their aggregation insert for certain events, be it in cyber or terrorism or PV. We need to try and help them understand our clients' portfolios more to determine actually what that risk is.”

Watch the 8-minute video with BMS Re’s Hannah Watkins to hear more on: