Washing up after Badens Oktober risk fest

Baden-Baden is probably still clearing up after hosting the insurance and reinsurance industry’s very own Oktober riskfest. All week the lobbies and salons of the grand hotels lining the banks of the River Oos were stuffed with suited and booted executives from eight in the morning until the first cocktail parties start at 6pm. Then the action switches to the city’s many posh restaurants and later, for the diehards, the late night, early morning bars of the casino and Leo’s bar.

The annual convention, during which the ground is laid for the 1/1 renewals, allows the European markets to take stock and recalibrate. It is an animated scene compared to the Rendez-vous in September. In Monte Carlo it is noticeable that people are in casual outfits; they sit back in their chairs to chat amiably about how market conditions might pan out. In Baden everyone is wearing a dark suit and tie; they lean forward during their meetings at numbered tables, listening attentively.

In some years at Baden – when there has been an active hurricane season, for example – the convention can generate a lot of heat especially around the potential for a pricing correction. But in the absence of a major event, this year’s Baden meeting was a calmer affair with more nuanced discussions about where rating is headed and how reinsurance buyers can optimise their programmes.

The broad brush picture seems to be that reinsurance sellers have abundant capacity and though willing to be flexible enough to keep business, they have drawn a line in the sand. Reinsurance buyers, for their part, are quietly pleased to see prices still going sideways despite a series of costly – if not apocalyptic – cat events that included windstorm Xynthia and the Chile ‘quake.

There are pockets of problems for both sides obviously, including motor business (they still can’t find the handbrake) and credit (still in the red).

Uncertainty continues to surround Solvency II: some people believe it will be the saviour of a slow growing reinsurance market and force insurers to buy more cover. Others fear it will create consolidation among primary companies and strangle competition. A few genuinely believe that the European Commission will never get it past the post. But that’s another story and one that will still be running next October in Baden-Baden.