Baden-Baden 2023: Key Takeaways

TL;DR:

  • Baden-Baden showcased a reinsurance market transitioning towards stability following last year's volatility.
  • Opinions diverged on whether peak pricing has passed or if some lines remain hard.
  • Transparency initiatives aim to attract new capital inflows after 2022's rate hikes.
  • No expectations for additional wholesale price increases, but uncertainty around some casualty lines.
  • Kickoff event focused on luring alternative capital through better data access.

The annual Baden-Baden Reinsurance Meeting provides an invaluable glimpse into the global reinsurance landscape.

Its September timing allows clearer insight into market dynamics versus the earlier Monte Carlo RVS gathering.

This year's meeting portrayed a sector seeking stability after 2022's turmoil.

We interviewed key industry players outside Leo’s in Baden-Baden this year for The Reinsurance Podcast - find them here for free.

Here are the key takeaways:

1. Transitioning to a Stable Outlook

The memory of last year's turbulent interactions over rate hikes was still fresh in many attendees' minds.

However, the atmosphere at Baden-Baden 2023 marked a significant departure from that past volatility.

Repeatedly, the words "stable" and "orderly" emerged as the industry's mantra, signalling a collective desire to move beyond 2022's disruptions.

While certain segments, particularly property cat, might still see justified increases due to inherent risks, the consensus was that the market is working towards an equilibrium.

The emphasis now is on sustainable growth and long-term stability, aiming to reduce knee-jerk reactions and maintain consistent market behaviour.

2. Hard or Soft? Differing Opinions

There's an age-old debate within reinsurance about market cycles – specifically, when is the market hardening, and when is it softening?

This year, opinions diverged noticeably.

Some industry veterans believe we're in the throes of a hard market, driven by recent losses and cautious capital.

Others argue we've passed the peak and are moving into a softer phase.

Despite differences, there was broad agreement that we're experiencing a moment of price equilibrium.

2022's extremes, characterised by stark price swings, seem to be giving way to a more balanced 2023.

3. Transparency to Attract New Capital

The Guy Carpenter kickoff panel encapsulated the need for change.

The industry recognises that attracting new capital goes beyond merely offering attractive returns.

There's a burgeoning demand for transparency, data accessibility, and risk clarity.

The events of 2022 had, for many investors, underscored the importance of understanding underlying risks.

This means finding ways of getting better reinsurance data.

As reinsurers now report improved returns, mirroring other financial instruments, the renewed focus on openness is anticipated to bring back investors who had been previously wary due to last year's complexities.

As reinsurers now report improved returns, mirroring other financial instruments, the renewed focus on openness is anticipated to bring back investors who had been previously wary due to last year's complexities.

4. Lingering Uncertainty in Casualty Lines

Despite the general atmosphere of stability, not all areas of the market are in the clear.

There remains a tangible sense of uncertainty, especially around US-exposed casualty lines.

But the industry's approach seems to have matured in anticipation of 2024 reserve adjustments.

Instead of wide-ranging, sweeping changes in pricing and capacity, reinsurers are exhibiting a preference for calculated, measured adjustments.


The hope is that this approach will maintain stability even in these more volatile lines.

Baden-Baden 2023 presented a snapshot of a reinsurance market in metamorphosis.

After grappling with 2022's upheavals, the industry is keen on fostering stability and predictable pricing trends.

The push for transparency, aimed at attracting fresh capital, underlines this commitment.

While pockets of uncertainty remain, particularly in hard lines, the signs are promising for a more predictable and stable 2023, provided no major shocks disrupt the current trajectory.

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