Aon's Marcell calls on reinsurers to provide quotes as 1/1 looms

Aon Reinsurance Solutions chief executive, Andy Marcell, has urged reinsurers to provide quotes to cedants amid concerns that the January 1 renewals will be late.

Writing in a blog post, Marcell said now is the time for reinsurers to provide quotes “that enable transactions to be concluded”.

Cedants, Marcell said, were looking for capital providers “to offer them a level of certainty in an uncertain environment” and to provide “sufficient governance time for quotes to be reviewed and accepted”.

He said: “We understand reinsurers’ need for certainty around capacity deployment and the associated pricing in this dynamic marketplace, but while our clients are willing to move fast, they still need time.”

Marcell said clients wished to lock in their cover in “a timely manner and then move with confidence into 2023, seeking opportunities not just to grow their own business, but the businesses of their carriers”.

Those reinsurers that demonstrate an understanding of clients’ needs and a “longer-term commitment to providing sustainable solutions in a consistent and thoughtful way” would become more successful, Marcell said.

He added Aon is already seeing examples of entities raising capital to “seize opportunities” in the current environment.

“We believe that the renewals period represents a time to move towards, not away from risk, and those that do so will be rewarded for their endeavors. In this relationship business, anyone that steps up to the plate will be remembered and valued as a true partner,” Marcell said.

He continued: “We recognise the challenges many reinsurers face; however, those reinsurers that seize opportunity will be remembered as economic enablers for years to come.
“We need to be part of the risk management conversation; be the solution, as if we shy away from taking risk, we ourselves risk losing relevance as clients identify alternative, sustainable and consistent options to manage their exposures,” Marcell added.

Marcell’s comments come amid expectations of a tough January 1 reinsurance renewal season with reinsurers seeking to drive through considerable rate increases and tighten terms and conditions. 

Beazley, which last week raised £350m ($362.9m) to take advantage of hardening market conditions, told investors it expects property reinsurance rates to rise 50% in 2023 with the “market dislocation... likely to persist for a number of years”.

Conduit Re chairman, Neil Eckert, said current reinsurance market conditions were the “best the industry has seen in decades”. 

“As we move towards the industry-important January 1 renewals, the existing capacity shortage in the reinsurance sector is turning into a capacity crunch,” Eckert said. 

Hurricane Ian and a deteriorating macro-economic situation have further impacted balance sheets and risk appetite on both sides of supply and demand for reinsurance, he said. 
Fitch has said it expects property catastrophe reinsurance rates to increase by “well over” 10% at January 1 renewals.  

The rating agency now expects the global reinsurance sector’s accident-year combined ratio to improve four percentage points to 96% in 2023.