Axis’s McKenna: Hardening casualty market “necessary” for industry

Mike McKenna, head of North America at Axis, believes the continued hardening of the casualty market is crucial for the sustainability of the industry, citing rising loss costs and complex risk environments as driving factors.

Speaking to The Insurer TV at the recent WSIA gathering in San Diego, McKenna highlighted social inflation and the growing frequency of nuclear settlements as major concerns for carriers.

“The hardening of the casualty market is necessary,” said McKenna.

“The ability for carriers to keep pace with these rising loss costs and trends is something we, as an industry, really have to make sure we manage.”

With more middle-market business moving into the E&S space, McKenna attributed this trend to broader market dynamics, including social inflation, larger jury awards and climate change.

"The uncertainty around the casualty product, in particular, is continuing to drive more business into the E&S marketplace," he explained.

On social inflation, which prompted loss cost increases to peak at 7 percent in 2023, according to Swiss Re research, McKenna outlined how Axis was taking steps to address this in the marketplace.

“We are doing things like reducing our limits as a way to combat it, we are raising prices accordingly, based on the cost of goods sold going up.

“And I think those things, in addition to really paying attention to the geographies and the areas where loss emergence is bigger than in other places, that's something we're focusing on quite heavily.”

While McKenna expressed confidence in the resilience of the E&S market, he acknowledged the balancing act required in property markets.

“We’re on the back of substantial hardening in property. The market is in a premium adequate state at the moment, with capacity returning,” McKenna noted, suggesting that the current state of equilibrium offers new opportunities.

Axis has also been expanding its footprint with the recent launch of an inland marine division. McKenna pointed to market opportunity and the need for specialised underwriting as key factors behind this move.

“[Inland marine is] also an area for us to continue to add products where specialists are needed, and specialty underwriting across specialty marketplaces is really what it takes to succeed,” he said.

“So we saw a market need, we brought some specialists to bear, and we think it's a good market proposition for us.”

Watch the full interview to hear more about: