Peach Pi’s commercial distribution and trading director said 2023 has seen ’really tough reinsurance renewals for everybody’
Peach Pi’s commercial distribution and trading director Russell White has warned that 2023 will be a “tough and crucial” year for the commercial market following “really tough” reinsurance renewals.
The January renewal season was particularly gruelling this year amid geopolitical and macroeconomic headwinds in 2022, such as Hurricane Ian and interest rate hikes across the globe.
A report published on 3 January 2023 by Howden Group Holdings said these headwinds had led to “highly challenged and complex reinsurance renewals at 1 January 2023”.
“Structures and coverage terms were at the forefront of property catastrophe negotiations this year, amidst recognition from all parties that prices would rise significantly,” it added.
White told Insurance Times the rises in renewals would “only add more inflationary pressure”.
He said: “This has been a really tough reinsurance renewal for everybody.
“It was a huge sigh of relief that, in the end, we had more than 100% of capacity available for our schedule, which was great.
“But, it’s increased terms [compared] to what we had last year and, as you’d expect, everybody will have been going through that.
“That will only add more inflationary pressure to those that already existed, which of course everyone has been seeing.
“So, it is going to be a really tough year, a crucial year for the industry.”
Can be challenging
Niche insurer Peach Pi offers commercial insurance through broker partners with a focus on schemes business.
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White said that, given an inflationary environment, underinsurance could become a problem for businesses – this could create more of a challenge for brokers in terms of client conversations.
“We need to make sure that people have got the right level of cover and that small businesses are buying the right level of cover,” he added.
“So, if a failure happens, they don’t suddenly get a shock when their insurance either doesn’t respond or doesn’t respond as fully as they were expecting it to.
“That’s a challenge because sometimes for brokers, that means a lot of work on margins that are already quite thin when we look at small business premiums, which aren’t always that huge.”
Meanwhile, White felt the cost of living has had “direct and indirect” impacts on the commercial market, with there being a mix of “conflicting and contradictory” pressures.
“So, a business itself can be well capitalised in a strong position, but you certainly hear stories of businesses whose customers have decided that whatever service or product they’re providing has become a luxury rather than an essential item,” he said.
“Through no fault of that particular business, you can see its sales really dropping and at the same time, it’s needing to increase the wages of staff.
“So, it’s been tough for different businesses, but even in times like this, I suppose different businesses come up with creative ways and creative solutions to fill some of those gaps.”
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