Insurance premiums are going to need to harden in the wake of recent natural disasters, according to one industry executive.
Insurance industry losses from hurricanes Harvey, Irma and Maria, and the recent earthquakes in Mexico, are expected to be in the neighborhood of $100 billion – and the industry is going to have to do something to mitigate the damage, according to Jonathan Reiss, group chief financial officer at Hamilton Insurance Group.
“There’s no question that rates are going to harden in some lines of business,” Reiss said during a speech at InsuranceERM’s Insurance Risk & Capital Conference. “Terms and conditions are going to tighten. You can call it what you will – a market turn, a hardening.”
Reiss said that margins in most lines of business were thin or nonexistent after a prolonged soft market, according to a Royal Gazette report.
“There’s no mystery as to how we got to where we are today: A prolonged period of low-to-no interest rates, a lack of catastrophes, reserve releases and the influx of alternative capital,” Reiss said. “At the same time, we are facing a potentially explosive increase in new risks such as cybersecurity and climate change. This market cycle is forcing our industry to face some inconvenient truths.”
