As we approach the end of 2013 and look forward to 2014, particularly the 1/1 renewal date, Reeken Patel, insurance partner and Dom del Re, catastrophe insurance expert, both of PwC offer comment.
Reeken Patel, insurance partner, PwC, comments:
"As we approach the 1/1 milestone, confidence from the London market about the coming year is broadly in line with 12 months ago. A barometer for confidence is comparing how plans this time last year for 2013 compare to those now set for 2014. It seems market participants are holding aggregate planned combined ratios broadly flat.
"This won't be easy to achieve as there continues to be an abundance of capital in the property catastrophe market. We are seeing this manifest itself through plans for the London market to take on more than 10% greater exposure to US windstorm risks in 2014 than they had planned to in 2013. This increased capacity for such risk, coupled with lower than expected losses, are piling pressure on 1/1 rates as well as terms and conditions in related lines."
Dom del Re, catastrophe insurance expert, PwC, comments:
"2013 has been the least active hurricane season since 1982. Whilst this is good news for earnings, it puts further downward pressure on rates in peak regions such as the US. The London market is responding to this by using its networks to access new markets where rates are holding or increasing."
Reeken Patel, comments:
"Our market view suggests an improvement in initial planned profitability from 2013 for some classes, in particular for accident and health. Interestingly we see greater consideration of increased acquisition costs as part of the planning process. It seems as though the market is pricing in the expectation that aggregate acquisition costs will rise as brokers modify the way in which they serve their clients and how they charge for this. Their challenge seems to be to ensure they recognise value for any such increases and to engage their brokers accordingly."
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