Favourable property market to continue amid flight to quality

Everest’s global head of property and deputy chief underwriting officer for the reinsurance division Sharry Tibbitt explains the company’s outlook on property renewals.

What are your expectations, particularly for property, heading into the upcoming renewal?

We expect this disciplined underwriting cycle to continue, maintaining particularly favourable trading conditions in property and specialty lines. We have reached a new baseline in this elevated risk environment and, with additional demand entering the market, attachment points, terms and conditions should remain stable. We are encouraged by, and open to, the continuous opportunities from cedants’ incremental demand and expect risk-adjusted returns to remain excellent through 2025.

In property in particular, we expect favourable market conditions to remain as new capacity supply continues to be driven by disciplined players like Everest. We expect property pricing to remain stable at 1.1.25 with potential improvement given the heightened risk environment to occur.

We anticipate cedants will continue their flight to quality as they refine their panels – choosing reliable partners like Everest, whom they can trust for consistent and quality capacity.

With 2024 already proving to be an above-average catastrophe year, how is this likely to impact renewals?

The frequency and severity of catastrophic weather events continues to increase globally, creating a “new normal” in our risk environment which will continue to drive demand for capacity.

With Hurricanes Beryl, Helene and Milton, 2024 has already proven to be an above-average catastrophe year with insured losses 25 percent above the 10-year average, but the market remains resilient.

Secondary perils are rapidly becoming the leading cause of loss for insurers, accounting for 67 percent of global insured losses in 2023, according to Aon. Losses have become fundamentally different. For example, 2023 Italy hail losses are estimated to have cost insurers a record $2bn and the UAE and Oman flooding earlier this year is expected to surpass $2bn, with Dubai being significantly affected. These dynamics are driving the continued flight to quality, and the need for partners like Everest who can provide superior capacity and stability.

How is Everest planning to approach property renewal conversations with partners and cedants?

We approach all renewal conversations the same way: with consistency, transparency and collaboration. Looking forward to 1.1, we want to learn from our clients how they are addressing the complexities of the current risk environment and in turn will provide creative solutions and quality capacity to help them navigate and support their growth.

Regardless of the market, our approach doesn’t change. Everest is a preferred partner because we are dependable and fair, communicating clearly and doing what we say we are going to do. Our partners always know where we stand and what our appetite is, and we offer the right terms and conditions at the right price. Furthermore, we make working with us easy, with local entities empowered to make decisions, free of bureaucracy – a rarity in this business.

What are the challenges and opportunities in property?

Increased severe atmospheric events continue to drive insured loss cost for natural peril-related covers. There should be caution around continuing to cross-subsidise this additional climate change-induced loss by storm and quake premium for top scenarios worldwide. EMEA in particular has been heavily impacted by flood and hail events, which are likely climate change related. Consequently, the most effective market standard pricing and modelling approaches are likely to evolve due to changing climates. While inflation has tapered off, we are still very aware of increased cost of claims in certain areas.

However, Everest’s financial strength and disciplined underwriting protects against rising natural catastrophes and the compounding insured losses. Our diversified book and strong portfolio management reduces our volatility and creates capacity. This active risk management approach positions our property catastrophe business to remain profitable and perform regardless of the evolving risk environment.