Fallout from the cancelled Aon-Willis merger, and Willis Re’s subsequent sale to Gallagher Re, has been a major driver of a competitive shake-up in the reinsurance broking industry over the past year, and was a key theme for speakers at this week’s (Re)Connect event.
Challenger brokers said they expected no diminishing of competitive pressures as the war for talent has become increasingly costly.
For example, earlier this week, Lockton Re CEO Tim Gardner emphasised the positives of the situation by stressing that it made talented executives more willing to move out of major firms to join smaller brands.
While Gardner said the industry had to be realistic about the prospects of all new competitors enduring, McGill & Partners CEO Steve McGill highlighted the likelihood that further intermediaries will join the fray.
Large US retailers may consider taking steps to enter the sector, or potentially wholesalers such as Ryan Specialty or Amwins, he suggested, adding that the $3bn of directly transacted revenue passing from cedants to reinsurers represented a significant opportunity for intermediaries to seize.
The challengers stressed that reinsurers wanted a more pluralistic market. “If you take a reinsurer lens, where they saw 70%, 80% or 90% of their business coming from three sources, it just didn’t really feel like a viable marketplace,” Gardner said.
With that said, earlier in the week Aon reinsurance CEO Andy Marcell emphasized that what cedants were focussed on was not so much a firm’s background, but its capabilities, describing M&A as a “sideshow” for buyers.
“It’s more about ‘what can you do to improve my outcome?’” he said.
Amongst all intermediaries, there were several key themes that they were keen to highlight investment in, but where there may have been slight variations in focus.
These ranged from advising on climate change data and capabilities to assisting with better cooperation between insurers and reinsurers on ESG goals, to trying to develop the market for new risks and reinsurance of intangibles.
But for example, where Aon said it would prioritise investment in climate change modelling and science, Guy Carpenter said that ultimately regulatory requirements and disclosure frameworks – or stronger pricing signals – would be the key to clients providing more disclosure to reinsurers.
TigerRisk CEO Rod Fox also said he believed that opportunities for pandemic cover would persist as the virus remained at large, citing the firm’s Spotted Risk film industry production cover as an example.
(Re)Connect is running until Thursday and registration is free. The agenda is available online.
