The year of the e-Monte Carlo Rendezvous?
The annual September pilgrimage of global reinsurers, cedants and brokers to the 2021 Monte Carlo Rendezvous has been put on hold for the second year in a row due to COVID concerns. That is unwelcome news for the local casinos and infamously pricey catering and entertainment industry, particularly the Café de Paris whose much sought-after tables are normally hotbeds of industry gossip and pricing strategies for the next year’s renewals. Any conversations this year will necessarily take place in the virtual world, making this the second e-Monte Carlo Rendezvous!
This year of all years, there would been plenty to get excited about on the French Riviera. No doubt the conversations are continuing online on Zoom or MS Teams. The topic of claims will feature high on the corporate agenda. Not surprisingly, COVID claims are eye wateringly large. As of June 2021, the running total was: US $37.381 billion. The top ten insurance carriers affected by COVID are as follows:
Table: Source, Reinsurance News
While there is light at the end of the COVID-19 tunnel, we will likely see hardening market conditions persist throughout 2021. According to Property Casualty 360, 2020 was the most active hurricane season on record, meaning losses were below reinsurance retentions and primary markets were left to bear the brunt of claims. Carriers also took a hit in profitability from wildfires, convective storms, and attractional losses, with several reporting combined ratios over 100%.
The onset of 2021 saw single-digit rate increases, a significant drop from preceding years when rates were increasing by 15% to 20%. This meant high capacity and peaking rates, driving property markets to build larger budgets. With the industry already set up for plateaus, when Winter Storm Uri hit Texas in February of 2021 and caused $15 billion in impact, it took the market by storm.
Over the past year, drastic lifestyle changes have had a direct impact on the cybersecurity market — leading to an uptick in ransomware and targeted attacks. For example, the shift to a remote workforce has significantly heightened the risk of network security threats for businesses. As a result, we have seen rates skyrocket for more complex classes of businesses like municipalities and manufacturing, up to 20% to 40%. Even the insurance space has been significantly affected by ransomware attacks.
Believe it or not, the ever-evolving cannabis/CBD industry means growing risks, while excessive fee litigation is changing the fiduciary insurance market. Opportunity in offshore wind infrastructure spurs a shift in energy. The growth of wind farms is on the rise with millions of acres already developed over the last five years. The growth of the industry is bringing business sectors together to make offshore wind farms a reality.
The growth of the industry translates into a growing need for infrastructure and liability protection as a result of the Longshore and Harbor Workers Compensation Act (USL&H), including considering new occupational liability exposures that did not exist before, and providing adequate coverage for any associated risks.
In our next blog, we will focus on the European insurance market.