“We are the advocate of the client. It is our job to make a market; to negotiate in that area around capital versus risk. Reinsurers want to grow, cedents want to buy more,” Julian Enoizi, CEO Europe, Guy Carpenter explained in an interview with Intelligent Insurer from the 2024 Baden-Baden Reinsurance Meeting.

“It is our job to get reinsurers to distinguish between the USD 100 billion of cat losses globally, including the recent focus in the US on hurricanes Milton and Helene, and the fact that Europe has had only around USD 7 billion of losses to date in 2024. It is important that each cedant’s portfolio is reviewed on its own merits,” he emphasized.

Enoizi emphasized that the portfolio adjustments many European insurers have made in recent years should not be overlooked. These changes have enhanced the attractiveness of the sector for capital deployment. “Our responsibility is to clearly communicate these significant improvements to reinsurers,” he stated.

As reinsurers seek to deploy their capital, Enoizi anticipates a broader discussion in this renewal season regarding the role of reinsurers in supporting cedants. With retention levels on the rise, while reinsurers continue to protect cedants’ capital and solvency, he believes there should be greater emphasis on helping them manage volatility.

“This issue needs to be tackled,” Enoizi explained, noting that while some reinsurers may argue that their primary function is to cover capital events, insurers also need assistance in managing volatility. “If insurers are left to handle it alone, the role of the reinsurer diminishes.”

As for the trends expected to develop during the renewal season, Enoizi highlighted that during negotiations, reinsurers may focus on deploying more capital at the upper end of structures, potentially putting downward pressure on rates. He explained that reinsurers are cautious about moving lower in structures due to recent extreme weather events in Europe, such as floods, leading to higher retentions and avoidance of secondary perils.

He also emphasized the "protection gap" as a key opportunity for both insurers and reinsurers, particularly in catastrophic events, where only about 30% of losses are typically insured. This gap, along with emerging risks like cyber, offers a chance for billions in new premiums, helping enhance societal resilience.