Guy Carpenter’s Vicky Carter on Building Reserve Buffer for Long Tail Lines

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In this video interview with The Insurer TV in concurrence with the 2023 Monte Carlo Rendez-Vous, Guy Carpenter’s Vicky Carter, Chairman of Global Capital Solutions, International, along with Maamoun Rajeh, Chairman and CEO of Arch Re, discuss concerns over potential reserve deficiencies for specialty and longer-tailed segments driven by social inflation.

Vicky explained how efforts by some companies to manage their portfolios with an emphasis on addressing these risks could prove to be a major differentiator over the coming years.

“The big concern we have as an industry is that while we're in a fascinating market now–it's exciting, this huge opportunity–at some stage, and it could be 2 or 3 years’ time, the market is going to come off,” Vicky said. “Then it's going to be about how companies manage the cycle when rates start to deteriorate again.”

Vicky described the market as remaining in a “state of flux,” with some longer-tail classes still facing downward rating pressure.

“You’ve got certain classes of business where people would say we're in a very hard market,” she explained. “You've got other areas of business–such as D&O (directors & officers liability) and other professional lines–where markets, cyber in particular, are challenging. Potentially, rates are going down on certain casualty lines.”

Vicky further explained how the challenge for (re)insurers was how they go about continually re-underwriting and optimizing their portfolios against the backdrop of heightened uncertainty and volatility.

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