(Re)insurers cannot count on benign catastrophe years in order turn a profit, the chief executive of IGI UK has said

Speaking to Re-Insurance on the eve of this year’s Monte Carlo Rendez-Vous, Andreas Loucaides said the sector must adjust to the “new normal” as property rates remain roughly flat, defying speculation that they would spike following last year’s catastrophes.

“The rating environment isn’t moving as much as everyone would like it to,” Loucaides said. “While we’ve seen some pockets of movement, it isn’t enough,” he added.

Loucaides said it shouldn’t be the norm for “nearly everyone to lose money” in a year like 2017, which was marred by Hurricanes Harvey, Irma and Maria as well as wildfires across the state of California.

“In a non-cat year, most underwriters can just about walk away with a profit,” Loucaides said.

“We can’t have an industry that relies on not having cats,” the executive went on.

“Our industry is built around protecting people in the event of catastrophes,” he went on.

For IGI’s president, Waleed Jabsheh, diversification is the key to ensuring profitability in the prolonged soft market.

He explained that IGI’s network of regional hubs in London, Bermuda, Kuala Lumpur and most recently Casablanca, as well as offices across the Middle East, allow the carrier access to the more “vanilla” business that he said is increasingly “staying at home” rather than going to traditional international (re)insurance markets.

Jabsheh stressed that – in order to access certain books of business – it was crucial for carriers to have a presence in those regional hubs, which he said have become a lot stronger than they were 10 to 15 years ago.

“Most international brokers are in these territories with boots on the ground – the prevalent tendency is a drive to feed local markets first and foremost,” Jabsheh said.

“There are also indigenous brokers that are very strong in their respective territories – and you cannot be ignored as they do hold and control plenty of attractive business,” he added.

“If you’re not physically present within these regional hubs, you’re ultimately not going to have access to the wider spread of business.”

However, despite buyers increasingly staying in their own territories to purchase insurance where possible, Jabsheh said that London remains the centre of the specialty (re)insurance market.

“Between Lloyd’s and the company market more than £70bn of premiums is underwritten in the London market,” he said. And IGI is keen to capture a greater slice of that pie.

“It’s no secret that we’ve been looking at Lloyd’s and exploring the possibility of an entrance,” Jabsheh said.

He said that a move into Lloyd’s would “bring a lot of benefits” to IGI, however, under current market conditions, Jabsheh said “the right steps need to be taken at the right time”.

“We continue to evaluate and explore the opportunity, but concrete decisions have yet to be made,” Jabsheh said. “An entry into Lloyd’s would be a very big step for IGI – a step that would involve a significant amount of investment and a significant amount of risk,” he went on.

“We’re in no rush, we are happy to sit tight and wait for the right opportunity to present itself.”