GC’s APAC CEO: Retentions and reinsurance pricing key focus among cedants

Retentions and reinsurance pricing are among the key focus areas for Asia Pacific (APAC) cedants ahead of the January renewal season, Guy Carpenter’s CEO for the region has said.

In an interview with The Insurer TV, Tony Gallagher discussed the key trends he had observed among insurance buyers in APAC in the run-up to this week’s Singapore International Reinsurance Conference.

On retentions, he noted there had been a number of losses through the year, but a lot of these had been absorbed by insurers rather than reinsurers.

This is prompting insurers to consider their retention levels and whether further conversations are needed in relation to program structures, Gallagher added.

“Many of the markets I speak to that have paid increased reinsurance costs, they haven’t got the recoveries they thought [they would] under the structures, so what’s the new normal for them?” he questioned.

“Now that’s a dialogue between the markets and the reinsurers to make sure that they’ve got the right structure for their program and the right pricing. Now what drives that is going to be loss activity.”

Fitch Ratings said last month that adequate capacity has created stable reinsurance pricing in the region, a shift from the prior year’s hard market conditions.

Gallagher noted that the main difference between the upcoming renewal season and 1.1.2024 is around supply and demand of capital.

According to Guy Carpenter, the supply of capital has increased by around 9 percent throughout 2024.

“So you’re getting a bigger supply of capital coming into the market, which is good news for buyers.”

On the demand side, Gallagher said he had observed “relatively stable demand” from the marketplace.

“If that follows through, we’re going to start to get a bit of an adjustment between the terms and conditions we had in prior markets,” he said.

Gallagher also discussed how parametric offerings can address the protection gap. Parametric insurance has been hailed as a potential solution for “grey swan” catastrophic events such as floods, earthquakes and named windstorms.

“It’s a concept really where you’ve got models and you’re able to measure events to create triggers which provide capacity for event.

“Parametric is a wonderful tool as we build out this increased awareness of insurance and individuals buying insurance.”

Watch the full interview to hear more about: