What were the big insurance stories from Monte Carlo’s yearly reinsurance get together?
Insurance Times
The leading information, analysis and insight brand in UK general insurance, part of Newsquest Specialist Media Ltd
By Yiannis Kotoulas, Deputy Editor
Every year in September, the simply named Rendez-Vous De Septembre reinsurance conference takes place in the city state of Monaco’s most famous district – Monte Carlo.
And, for the past two years, this UK insurance-focused journalist has hopped aboard the short flight to attend the world’s premier reinsurance event in support of Insurance Times sister title Global Reinsurance and its editor David Benyon MA VR .
The conference plays host to a selection of high level meetings, briefings, roundtables and the occasional yacht party – but what were the important themes to draw out for all of us back in the UK insurance sector?
A rosy outlook
Perhaps the biggest takeaway from the conference was that, on the whole, reinsurers from around the globe were in good spirits as profitability and performance remained in solidly positive territory.
Ratings agency Fitch Ratings had updated its outlook for the reinsurance sector to neutral days before the Monte Carlo meetup, with Manuel Arrive, CFA , insurance credit analyst at the firm, telling a press briefing audience "we expect both balance sheets and profitability to remain resilient in 2025".
Fitch director Graham Coutts added that premium growth was likely to continue to increase across the second half of 2024 and 2025, albeit only by single digit percentages.
This will mean continued increases in reinsurance costs for insurers as the reinsurers look to solidify strong profitability, but the elevated cost is likely not the most significant hurdle to navigate.
At its own press briefing, German reinsurer Hannover Re noted that the industry was seeing a "continuing trend" of hardening in reinsurance deal terms and conditions – meaning that insurers have been encountering more stringent underwriting and risk assessments across the reinsurance renewal season.
Rating agency AM Best also noted the importance of this as a trend, with the firm's senior director for global reinsurance Carlos Wong, FIA, FRM explaining that he believed that "changes in terms and conditions, the increase in attachment points and the tightening of wordings are as, if not more important, than pricing”.
Long-term relavance
Another key trend for the insurance sector to note from Monte Carlo was that reinsurers are increasingly getting in on the primary insurance game.
According to data from AM Best , 2023 was the second year in a row that more than 50% of the reinsurance market's available capital had been deployed into primary insurance.
It may come as a surprise to those of us in the primary insurance sector, but those firms that we associate primarily with the heady heights of reinsurance are, more often than not, now playing in our sandpit.
AM Best senior director and head of analytics and operations, Angela Yeo , explained: "For many years now, AM Best has noted a gradual shift in reinsurers moving their business towards primary insurance.
"A shift has happened - reinsurers are considering how to change their underwriting strategies, meaning their exposure to natural catastrophe, for example, has been reduced."
From the primary insurance perspective, the obvious question here is where that leaves insurers who do want to mitigate their own risk by buying reinsurance? How can reinsurers remain relevant for the long-term when this role is becoming increasingly unpalatable?
I asked AM Best's panel in Monte Carlo exactly this – and analytics managing director Greg Carter told me: "It’s not an existential moment for the industry, but [the reinsurers stepping back from the risk] does highlight that primary markets will question whether they’re getting value for money or sufficient coverage.”
Anglo-Saxon concerns
One thing you notice when moving in the reinsurance world is the prominence of Germanic – mostly German and Swiss – companies dominating the market.
One imagines that this is something to do with the historically embedded strong risk management culture in these countries, alongside favourable structural conditions.
So, it was with some interest that I noted Swiss Re 's warnings about a growing problem that is primarily affecting the Anglo-Saxon world – the US, UK, Canada, Australia and New Zealand.
The Swiss insurer released its latest Sigma report in Monte Carlo, focused on the impact of social inflation – the claims inflation the sector is seeing based on societal factors and cultural attitudes that cannot be explained by purely economic factors.
Social inflation rates are of particular interest to counter-fraud teams in our sector because it provides a metric that a population's increased propensity for fraud could be measured by.
Experts at Insurance Times' Fraud Charter event have repeatedly sounded the warning about the increase in opportunistic fraud perpetrated over the past few years, as well as the increasing tides of spurious casualty claims for conditions such as tinnitus and fraud committed by commercial entities.
All of these factors point towards a changing cultural attitude towards fraud in the UK population and – whatever its drivers – it is worth noting that the UK is not alone in this trend.
Swiss Re's group chief economist Jér?me Jean Haegeli explained that there were "no signs of social inflation abating" even as economic inflation slowed, with this phenomenon focused on the US and the rest of the Anglosphere.
He said that the UK was seeing the most social inflation after the US, with rates running at 10% to top European levels, with significant levels also being tracked in both Australia and Canada.
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