In a recent video interview with Reinsurance News, James Vickers, Chairman of Gallagher Re’s International division, discussed the current state of the casualty reinsurance market, addressing key issues like pricing and capacity constraints.
Vickers pointed out that while improvements have been made in terms of pricing and policy terms, there are lingering questions about the long-term profitability of the business being written today.
In the video interview, he noted, “The question that’s been talked about for a number of years now is, although the original pricing has moved, terms and conditions have improved, line size has reduced, is the business being put on the books today actually capable of generating, ultimately, a profit for reinsurers?”
One of the key developments in recent years has been the faster settlement of claims. As primary insurers have reduced line sizes, claims are being resolved more quickly, shortening the overall claims tail. But Vickers warned that this speed is not without its risks.
While some claims are settling faster, “social inflation is still raging,” he explained, and large nuclear awards remain a threat. These factors, combined with significant underwriting changes since 2020, have left reinsurers questioning whether these recent policies will actually be profitable in the long run.
Vickers also addressed the issue of capacity, noting that while there is no shortage of it, the real challenge lies in reinsurers’ lack of confidence in pricing adequacy. “I think as a class of business, US casualty, is a class that a lot of reinsurers would like to write. I don’t think it’s a lack of capacity on their part. It’s a lack of confidence that the pricing is adequate and that they can be comfortable that they’re actually going to make a long-term profit.”
This hesitation has created a divide within the market, with some reinsurers eager to write business and others more cautious, watching the market closely before making any moves.
Watch the full video to hear more from Gallagher Re’s Vickers on the 1.1 2025 renewals, the property and casualty markets, the insurance-linked securities (ILS) sector, rising cat losses and more.
The full video interview is embedded below.
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