Property insurance pricing now at sustainable levels, says Swiss Re Corporate Solutions

Corporate insurance property rates are now at a sustainable level but insurers must continue to price in exposure trends, Swiss Re Corporate Solutions chief underwriting officer Kera McDonald told Commercial Risk. After several years of increases, McDonald believes that pricing in the corporate property insurance market is now sustainable. “For Swiss Re Corporate Solutions, we are currently in a sustainably priced market. We believe there is profit to be made in this market and we anticipate that the sustainable level will continue through 2024,” she said. Europe-based corporate property insurance is now renewing flat on a risk-adjusted basis, with only nominal increases to combat inflation and exposure trends, according to McDonald. “There has been a lot of talk about the rate increases seen in the last several years flattening out, and we do see that, especially for portfolios renewing at 1 January for the EMEA region. Pricing has flattened out, but at a sustainable price level,” she told Commercial Risk. Competition has been increasing and corporate insurance buyers are pushing brokers to achieve concessions, according to McDonald. “There will be a push as more capacity comes into the market on current rates. But we need to make sure we don’t get overly excited as an industry and take the rates down to a level that ignores [exposure] trends,” she said. According to Swiss Re Institute data, natural catastrophes cost the insurance industry more than $100bn again last year. This is the fourth year out of five that insured losses have been above the $100bn threshold. “This is the new norm and we as an industry need to stay in front of that trend to ensure we remain relevant,” said McDonald. She added that insurers cannot afford to become complacent about exposure trends. “Not only the frequency and severity of natural catastrophe events, but also concentrations of values, for example around coastal areas and urban centres, which brings a lot more volatility... There is a continued march to higher values, and nominal prices need to stay ahead of that trend. If we as an industry only pay attention to nominal [pricing], we will end up with a significant problem,” she said. Increased competition in the property insurance market is making it harder for insurers to win new business, explained McDonald. “There is a drive for [client] retention. Competitors are trying to retain their clients, so winning new business is becoming harder and harder on the property side. Although, when you compete on services, such as in the international programme space, there is still a significant opportunity to distinguish yourself as a company,” she said. Swiss Re Corporate Solutions plans to manage the next phase of the insurance market cycle through portfolio steering and management, alongside diversification. McDonald also emphasises the importance of transparency, and bringing the insurer’s underwriters, claims professionals and actuaries together in “smart circles” to share knowledge and respond quickly to trends. “We are actively steering risk appetite, and being clear with brokers and clients about our risk appetite is very important to us within the next phase [of the market cycle]. Making sure we are disciplined in our underwriting through the use of ‘smart circles’ will be a continued drive for us, and the core of what I do day to day,” said McDonald.

Property insurance pricing now at sustainable levels, says Swiss Re Corporate Solutions

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