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Marsh Re, the global reinsurance broker, spoke with Reinsurance News at this year’s Rendez-Vous de Septembre in Monte Carlo to set out the firm’s thinking on the January 1 renewals, the state of market discipline, and the growing role of governments in absorbing catastrophe and emerging risk. Among those representing the firm at the conference was Julian Enoizi, CEO of Europe at Marsh Re, who also continues to lead the firm’s global public sector practice. On rate movement at the January 1 reinsurance renewals across property and casualty, Enoizi was reluctant to be drawn into forecasting, arguing that early numbers only serve to set expectations before the substance of negotiations has really begun. “I’m certainly not going to talk the market down. I have seen a couple of our competitors give numbers. I think it’s far too early to do that. The problem is that it has created expectation. Clients are clearly expecting significant rate decreases but these may vary according to territory given some have experienced loss,” said Enoizi. For Marsh Re, the more pressing point is that the reinsurance market remains profitable following a comparatively benign year for catastrophes, which places brokers in the position of reconciling reinsurer desire to maintain discipline with client expectations of lower pricing. Enoizi suggested that one way to do this may be to demonstrate to clients that savings need not simply be banked, but could instead be reinvested in broader protection or in revisiting contract terms. “I think the reality is that you’ve still got a reinsurance community that is making money. Now that doesn’t mean that there’s no risk. It just means that they have had what I would say so far in ‘26 is a relatively benign year, which means their returns are going to be pretty good. Clients therefore will have an expectation, and our job is to make a market between the two. We will do that but I would hope that if there are savings to be made, some of those will be reinvested in buying other coverages to provide further volatility and balance sheet protection.” He continued: “Rather than negotiating over premium, we should also look at terms and conditions, and see whether clients have got the right balance: Is the division of catastrophe loss between insurer and reinsurer appropriate; can wordings that may have been overly corrected in 2023, now be reviewed.” Drawing on his own background running underwriting companies, Enoizi noted that the market has long struggled to agree where the line between healthy competition and a genuine loss of discipline actually sits. “I spent most of my career on the on the underwriting side of the market, and it has always been a mystery to me as to how underwriters blames each other or brokers for a lack of discipline. I think the difficulty is that if we are in a phase of softening, you’ve got to be really wary at what point you say enough is enough because it may well be that you come off business this year and sacrifice share of wallet this year, only to find that next year the trend continues downwards and that actually this year’s price was still adequate. At which point you’ve come off the business too early and it may be difficult to get back on.” On what cedents are looking for from reinsurance partners beyond capacity and pricing as the risk landscape evolves, the Marsh Re Europe CEO pointed to consistency of relationship over time as the decisive factor. “That’s simple. It’s stability, longevity, loyalty. Across the cycle relationship is key. But also, clients are increasingly looking for reinsurers that are willing to support them across all or most of their programmes, as opposed to those trying to generate alpha by picking classes and layers, are the ones that will I think fare better as we go into this downward cycle,” he said. Artificial intelligence also featured prominently in the discussion. He noted: “Data centres and the opportunity to deploy capital has been a big topic of conversation. However, AI is a massive opportunity more generally. To me, it’s two things: an efficiency play to reduce cost and drive data accuracy. But also developing AI systems that will allow better underwriting systems to integrate data, pricing, modelling, actuarial analysis and claims. “You are starting to see concrete examples of how AI will be used in the preparation of broking submissions or the calculation of pricing from an underwriting perspective, but it’s still fledgling with some start-up businesses, free from legacy systems, enjoying a potential advantage.” Looking beyond AI to the biggest driver of change in the market over the coming years, Enoizi pointed to the widening protection gap, and to the scale of economic loss from major events that continues to fall outside products currently sold by the industry. “In many of these programmes, you’ve got an enormous amount of economic loss that simply isn’t covered by the products that insurers are offering. Moreover, reinsurers are not using their excess capital to offer capacity to encourage product development either by carriers or MGAs. “The result is that we are seeing discussions around whether or not certain classes of business should be made mandatory by governments on the one hand and on the other, resistance to that from insurers averse to government interference and the end client not wanting what they perceive to be an additional tax. However, those governments that fail to act in implementing policy to encourage public-private partnership pre-loss, may be forced into it the next time there’s a large loss. “I’ve been saying this for a long time, and whilst pre-loss solutions still haven’t happened yet, we are beginning to see it. For example, discussions in Germany and Portugal around earthquake and flood offer opportunity to bring new private capital to bear on what would otherwise be borne by governments.” He identified two parallel shifts: growing government recognition of reinsurance as a tool for removing liability from public balance sheets, and a corresponding recognition within the reinsurance industry that deploying private capital against these risks must be paired with genuine risk adaptation and mitigation, rather than being treated as an open-ended commitment. Enoizi said: “One is increasing recognition by governments of the potential for reinsurance to remove liability from public sector balance sheets. That’s different to what we would have said, say, 10 years ago when their understanding of our industry was much less. “The second would be the realisation on the reinsurance side of the fence, that willingness to deploy more private capital needs to go hand in hand with risk adaptation and risk mitigation. You’ve got to find ways to marry adaptation and mitigation to the provision of capital, and that again needs public-private partnership because in some areas of risk, the government knows more than we do and can create the appropriate policy environment for our skills (modelling and pricing of risk) to be applied.” He added: “We can bring modelling and data to those risks. Ultimately, the government needs to develop and take policy decisions that allow the insurance industry to match a solution to a problem. The same thing happened in terrorism where the risk has shifted from government to the private market over the 25 years since 9/11.” On where the biggest disconnect currently lies between the risks governments need to transfer and the capital or capacity the market is prepared to provide, Enoizi described a circular problem in which neither side moves first: private markets remain reluctant to commit capacity to risks they do not fully understand, while governments, for a variety of reasons, remain reluctant to engage closely enough with the industry to help build that understanding. “Climate change for example: Drought is not a word you normally associate with the UK. The solution isn’t going to be to throw insurance at it. That’s where the disconnect is. Rather the question is how do you make it insurable? It has to be a hand-in-hand approach where each side is educating the other. In short, governments need to invest in resilience. “
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