Market Converging on ‘Negative’ View of US Victims: Scor’s Conoscente

The reinsurance market is “converging” around a “negative” view of the US casualty business, indicating an increase in upward pricing pressure on January 1, according to Scor.

P&C global CEO Jean-Paul Conoscente said at the operator’s annual Meet press conference in Monte Carlo last year where reinsurers differed in their degree of pessimism about US accidents as a class.

“Last year, (we had) a segregated market where European reinsurers had a negative view of US casualty and the US and Bermuda had a more positive view of US casualty,” he said.

“Today, the entire market is converging on a more negative outlook on US casualty, with loss trends outpacing price increases and improvement on the insurance side.”

Conoscente said this would lead to difficult renewal negotiations for US casualties and more extreme price corrections on the business than seen before.

“It’s not just about changing the (ceding) fees by 1 or 2 points to solve it,” he said.

The comments come amid growing anxiety about the state of the 2015-2019 US casualty years, for which some reinsurers have again booked extensively, and the more recent 2021-23 casualty years.

Scor group managing director Thierry Léger said in an interview with this publication last week that reinsurers may have been “too optimistic” about the health of younger accident years, which had previously been considered more stable than the pre-Covid-19 years.

Score predicted that in 2025, prices will fall slightly on non-cat properties in Europe and North America.

In the cat business, Scor believes prices will be stable for European sellers and slightly lower for North American sellers next year.

Conoscente said Scor’s preference for writing cat business remains at XoL, adding that it expects little appetite among reinsurers to shed attachment points.

“We remain very disciplined in having a minimum hold over which we deploy our capacity,” he said.

Prices will also be stable for European casualty insurers next year, Scor said, but in North America – where he called prices “inadequate” – rates will rise.

More broadly, Léger said at the press conference that the “insurability” of global risks is becoming increasingly challenged by four key trends.

The first of these is climate change and its impact on severe weather patterns.

Other trends making insurability more difficult are growing socio-political polarization, causing greater civil unrest; growing digitization and the increased risk of cyber losses; and the litigious environment in the US, creating casualties.

Léger said the industry is used to annual insured losses of more than $100 billion.

“We are now entering a world where world insured losses will be about $150 billion,” he said.

When a growth rate of 5%-7% per year — as seen in recent years — is applied to that figure, insured losses could reach $300 billion within a decade, the executive said.