Rudolf Schiel, Competence Center Manager Property & Engineering at GrECo, spoke with Klaus Riechmann, Managing Director of the new Ecclesia Re, about the challenges of placing property insurance programmes and the role of the reinsurance market.
Schiel: Ecclesia Re is a young company. How did an own reinsurance broker come to be founded within the Ecclesia Group and what were the motivations behind this?
Riechmann: There were already noticeable capacity bottlenecks in the primary insurance markets in the 2019/2020 renewal, which led to enormous problems in completing some programs. These bottlenecks were caused by local insurers. In order to be better positioned for the future the Ecclesia Group has now established direct access to the reinsurance market by Ecclesia Re which has already borne first fruits in the renewal rounds on October 1st, 2020 and January 1st, 2021. Ecclesia Re was able to find solutions in more than 10 business cases and limit the influence of uncompromising primary insurers.
Schiel: As a reinsurance broker, you procure additional insurance capacity for the primary insurer. Which markets do you usually target and what are the advantages for our clients?
Riechmann: Usually we use continental European capacities, led by the three major German-Swiss companies (Munich Re, Swiss Re, Hannover Rück), and followed by the second league, based in Germany, Switzerland (here especially Zurich), France and Spain. These reinsurers conduct independent underwriting that is not congruent with that of the local primary insurers, and thus represents a useful complement. This expands the range of products available to policyholders.
Schiel: How do you assess the situation in the reinsurance markets in Asia and the USA compared to Europe? To what extent are these markets useful for European policyholders?
Riechmann: Due to the strong regulation by European regulators, which makes capacity from overseas complicated and expensive, overseas markets that are interested in European business have traditionally established themselves in London. However, as a result of Brexit, there are also an increasing number of companies in Zurich under European law. This largely eliminates the need to go overseas.
Schiel: In the industrial property insurance a further hardening of the market is clearly noticeable. Apart from the pandemic, what has led to this change in the market and how do you assess further developments in the next one to two years?
Riechmann: Even without the pandemic, market hardening was in full progress. The pandemic has only reinforced this development. The trend will continue for the time being. This means that alternatives in the reinsurance market remain extremely helpful. What is surprising, however, is that renewal of the treaty reinsurance per the January 1st, 2021 has seen only moderate price adjustments in Europe. Consequently, in contrast to previous market phases, this time the pressure is coming from the primary insurers and not, as in previous market phases, from the reinsurers.
Schiel: Which industries from your point of view will continue to be affected by these developments in the future?
Riechmann: Essentially all types of operations, only the extent of hardening will vary. The known problem industries such as recycling, wood processing, and coal will be hard up against uninsurability. In the D&O as well as in the cyber industries, the massive shortage of capacity will continue. In order to meet the needs of customers here, other concepts will have to be considered ─ also with the help of the reinsurance market.
Schiel: The reinsurers have also recently demanded clarifications or exclusions in the property insurance contracts, such as for “communicable diseases” and cyber risk. Do we have to be prepared for further requirements and coverage restrictions here?
Riechmann: Once again, it is surprising that the reinsurers must demand these clarifications. Surely the primary insurers themselves should have an interest in clarifying things. Now we have the situation that there are many different clauses on the issues. For the broker this means reaching agreement on an appropriate clause before the placement begins and presenting it to the market. Usually, the market just wants to see that the issue is considered.
Schiel: Which strategy you would advise to our clients to adopt in order to be well equipped for future developments in the insurance market?
Riechmann: Basically, I always advise the same strategy: get out of the claims frequency and introduce appropriate deductibles. Check whether deductible models and captive solutions make sense. And finally, pay close attention to your own convincing risk management concept.
Thank you for the interview!
Managing Director Ecclesia Re
phone: +49 2234 9955 220
After 10 years in the industrial business of Allianz Klaus Riedmann joined the reinsurance broker Jauch und Hübener Rück in 1986. In 1993 he joined Marsh Group reinsurance broker Guy Carpenter as Managing Director of the Munich-based GmbH. In 2005, he took over as managing director of the German branch of the Benfield Group. Following Benfield’s takeover by the AON Group, he moved to König & Reeker, a Cologne-based reinsurance broker, again as Managing Director in 2009. Effective January 1st, 2020 he started to build up the reinsurance broker of the Ecclesia Group.
Ecclesia Reinsurance-Broker GmbH
Ecclesia Reinsurance-Broker GmbH, in short Ecclesia Re, is a new company in the Ecclesia Group and was founded in March 2020 with it headquarter in Cologne. Increasing customer value for (primary) policyholders and strengthening the competitiveness of the Ecclesia Group is the mission of Ecclesia Reinsurance-Broker GmbH. It acts group wide as a know-how unit for all questions concerning reinsurance. The Ecclesia Group has been a cooperation partner and strategic shareholder of GrECo International Holding AG since 2005.
Insurance claims management is our core business, especially when it comes to complex or major claims. In doing so, we strive to achieve successful results.
Practice Leader Property & Engineering
T +43 664 822 27 58