Guy Carpenter’s Laurent Rousseau Addresses Reinsurance Market Conditions

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In this interview in The Insurer, connected with the 2023 Baden-Baden Reinsurance Meeting, Guy Carpenter’s Laurent Rousseau, CEO, EMEA and Global Capital Solutions, discussed dynamics in the reinsurance market. He described price increases seen during the January 1, 2023, renewal season as “risk-adjusted-plus” pricing.

“Rate adjustments were factoring in multiple different market developments, such as changes in the risk environment, the ongoing impact of inflation, the geopolitical environment, and rising loss costs,” Laurent explained. “These contributed to a sharp rise in pricing in a short period, as reinsurers sought to generate stronger returns.”

He goes on to describe how this “risk-adjusted-plus” phase of pricing was now stabilizing across many business lines, but that he expected continued discipline at upcoming renewals.

As cedents have now had time to adapt to market adjustments connected with the January 1, 2023 renewals, Laurent envisions that upcoming placement negotiations could follow several paths.

“For example, growing insurance premiums and insurers’ strong results could serve to fund an increase in reinsurance purchasing,” he explained. “Alternatively, we could see insurers capitalize on their intensive efforts to manage portfolio aggregation more effectively, leading to strong solvency, by choosing to reduce the amount of reinsurance purchased and retain more of the frequency-type risks on their balance sheet.”

GC’s Rousseau: “Risk-adjusted plus” market phase may be “stickier” amid macroeconomic uncertainty