Jo Willaert, President of FERMA said:
Reports from the 1 April renewals indicate that reinsurance rates have been hardening in several territories and classes with a potential knock-on effect on commercial insurance. We have not yet seen this happening in a material way, but the elements are certainly there, especially the natural catastrophes in 2017 and 2018, market consolidation and continuing very low interest rates. Already in 2019, reinsurers have indicated that they expect significant losses from the Boeing Max 737 issue.
Insurance renewal negotiations this year could be tougher than they have been for many years. Typically, though, not all lines of business move at once. There is also still enormous capacity in the (re)insurance market. We expect insurers to continue to recognised professionally risk managed accounts with good loss records in their terms and conditions.
However, in a harder market, insurers become more technical. This is where the ability of the risk manager to present good quality risk information and take advantage of their broker’s services will strengthen their position in negotiating the insurance programme renewal.
Having this information in a clear format will also help risk managers to communicate with the CFO and other senior management. They will be able to demonstrate how the insurance budget fits within the enterprise risk management as part of company strategy.
The risk management methodology can be used to determine which lines of business or limits of cover are still worth purchasing or whether there is an alternative approach, such as retaining more risk or increasing transfer to a captive.
At the moment, the market is best described as fairly stable. We do not know if it will become a truly hard market. It is many years since we have seen one, but I believe that education in risk management is a key to getting the best from insurance if it happens. This is why FERMA promotes its European certification programme rimap® and we encourage risk and insurance managers to take advantage of education and training opportunities.
Events such as the FERMA Forum in November and conferences organised by FERMA’s member associations give risk and insurance managers a forum to discuss market conditions and encourage insurers to offer solutions.
The FERMA Forum 2019 from 17 to 20 November in Berlin offers free registration to risk manager members of FERMA and other risk managers who are employed full time in a single organisation. Registration is open now. Join us in Berlin to aim for the future.