The re/insurance underwriting cycle: hard market conditions go on
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We expect rate hardening in the re/insurance market to continue through this year and next as re/insurers respond to heightened uncertainty from social inflation, catastrophe losses and COVID-19 claims.
The key takeaways from this edition of Economic Insights are:
- Rate hardening in re/insurance is expected to continue through 2022.
- Tighter capacity has been mostly the result of reduced risk appetite rather than capital shortage.
- Reduced risk appetite is caused by elevated modelling uncertainty arising from social inflation, and nat cat and pandemic-related losses.
- Macro risks are also elevated with an increasing focus on rising inflation and interest rate scenarios, which can trigger adverse reserves development and losses in asset valuations.