NMG Consulting

Peaked? Yes. A new plateau? Maybe. Where are reinsurance prices headed? Highlights from our most recent report on P&C reinsurance renewals (completed in 2024), include: • >50% of insurers reported renewing on hardened terms • Hardening has been broad-based across regions and lines of business • Australia & NZ and Property CAT saw the highest increases • Coverage reductions have become less common (16%; 24% in 2023) • Softer renewals remain relatively few (12%) • Risk-adjusted increases averaged ~5% (9% on loss-affected portfolios) Expectations are that rates have peaked: • 2-in-3 insurers now consider rates to be adequate • Few consider current rate levels to be excessive • Expected increases in 2025 are projected to be in the low single digits • Rates are however not expected to soften materially • Property lines are anticipated to remain firm #Reinsurance #Insurance #PricingReport #Peaked

While the growth ‘rate’ of new installations of automated underwriting systems (AUS) has slowly trended lower, new installations continue to outpace decommissions. As a result, the penetration rate of AUS overall remains on the rise globally, with an ever-larger portfolio of active systems. The share of installations to reinsurer-owned systems has grown steadily, meaning that reinsurers have built successful propositions relative to those of technology firms and in comparison to business cases for in-house builds/upgrades. More than half of new installations of reinsurer-owned systems come from greenfield sites and in-house system replacements. Reinsurer systems have also proved to be sticky (even through contested upgrade processes). A consequence of the success of reinsurer-owned systems is that AUS offerings have become more central to reinsurer propositions over the past decade. More recently, reinsurers have concentrated their deployment of digital risk solutions across two core dimensions: ▪ Solutions that enable and enhance traditional competencies - product, underwriting, and claims ▪ The integration with reinsurance placements, either through accounts with a committed flow of reinsurance or into new ventures anticipating growth Looking ahead, reinsurers will continue to leverage their longstanding competitive advantages - knowledge, data, and a willingness to stand behind risks - thereby keeping solutions from technology firms at the margin and steadily transitioning insurers from in-house solutions. #AutomatedUnderwritingSystems #DigitalRiskSolutions #Reinsurance #Insurance Swiss Re #Magnum, Reinsurance Group of America, Incorporated #AURA, Munich Re #Allfinanz, Hannover Re #Reflex #Quirc, SCOR #Velogica, Gen Re #Compass, Pacific Life Re #UnderwriteMe, PartnerRe #DUETEdge

Sales of Income Protection products via retail intermediated channels have grown at ~13% annually in the UK since the start of 2021, contrasting with those of retail life insurance more generally, which fell over the same period. First signaled before the onset of the pandemic and holding steady since, interest in IP from the intermediary channel has been consistently robust, indicating that an uplift in demand has been an important contributor. Protection-focused intermediaries have been central to driving this uptick, although this positive trend has been visible industry-wide, including with mortgage brokers and generalist advisers. On the supply side, life insurers have responded proactively: ▪ With focused campaigns to raise awareness, partnering with industry bodies ▪ Broadening product suites to expand customer accessibility (~45% of IP sales in 2023 were of products with short-term benefit periods) ▪ Facilitating the growing usage of menu plans (comprising ~40% of IP policies sold for some providers in 2023) ▪ Investing to improve the quotation process and comparability of IP solutions on portals and comparison sites, thereby boosting adviser confidence to make IP recommendations In 2024, there are signals that retail sales of life insurance will lift more broadly, linked to a recovering mortgage market. Counterintuitively, this could pose a risk for IP sales, should intermediaries pivot back towards more easily sold mortgaged-linked products (as lead flow improves). Which makes it all the more important that life insurers and industry bodies continue to drive conversations about the importance of IP, to consolidate current sales levels and potentially expand consumer take-up going forward. Please reach out to our London team (Ralph O'Brien, Emma Morris, Cameron Staveley, Evan Baars) if you would like to know more. #IPTF #RiskDistributionMonitor #DistributionInsights #IncomeProtection

#NMGCharityChallenge2024! From 1 June to 31 August each year, NMGers become more active, health-conscious and community-focused for a great cause, earning '#NMGmiles’ and generating the creative energy to raise funds for children in need in South Africa. This initiative lies at the heart of our culture, not only giving us an opportunity to make a positive impact on those (much) less fortunate, but also boosting our collective health and well-being. It also happens to be great fun, and brings us closer together. The funds we raise support essential needs such as food and shelter, as well as ambitious goals like securing brighter futures through education and skills training. While this is primarily an internal initiative, we want to shine a spotlight on our four insanely-amazing charities that we support in South Africa: ❤️Elundini Educare ❤️Uviwe ❤️Tembisa Child and Family Welfare Society ❤️Thanda You can read more about the charities we support here: https://lnkd.in/gqtcJwxv #makeitcount #4thekids #go4it! #charitychallenge2024 NMG Benefits Solani Sibanda

NMG Consulting held its annual Global Offsite last week in Singapore, with more than 30 of us in attendance. Returning to where it all started for us back in 1992. Being 150 people, spread across 9 offices, time spent together is of the highest value, both personally and professionally. We have huge ambitions for these get-togethers, given how rarely we can all be together due to our global dispersion. What a team! Thank you to everyone for being fully engaged and leaving your mark in the discussions and on our collective thinking. Special thanks to Karin Barry, Polly Au, and Natasha Legge for pulling it off again in 2024. All your hard work paid off! Final thanks as well to our inspiring leadership team from across the globe: Mark Prichard, Oliver Hesketh, Ashwin Field, Stephen Collins, Hamish Worsley and Geoff Baars. #shapingourthinking #newideas #sharingknowledge #familyreunion  

The #VoluntaryBenefits insurance segment in the US stands out as a global case study, in providing a scale solution for the middle market. In 2023, new sales of employee-paid insurances rose again to USD9.34 billion, an increase of 6.7%. This is a new high-water mark for the segment, and makes for a definitive exit from the pandemic era. Term Life remains the largest product segment at ~20% of total new sales, and was again one of the faster growing classes (10%). With positive demand tailwinds, the Voluntary Benefits segment in the US is thriving. This growth also signals the relevance and momentum of the 'worksite' as a powerful distribution channel within the US, and underscores its potential in several markets globally. A big thank you to the Eastbridge team (Danielle, Nick, Ginger) for sharing their most recent analysis! Eastbridge Consulting Group #insurancegap #growth #voluntary #worksite

Counting down to next week for the 2024 Global Offsite for NMG Consulting. We are thrilled to have our globally-distributed leadership team (of more than 30 people) gathering in the city where it all began for us. #Singapore Our objectives include to reconnect, update, learn and brainstorm new ways to shape thinking going forward. If you happen to be around, feel free to reach out – we are in the neighborhood!

Specialist alternatives managers have long dominated their diversified, public-markets peers in the contest to raise funds from institutional investors for #PrivateMarkets asset classes. All the while, in retail, diversified managers have converted their strong brands and distribution breadth into 'mindshare' advantage in alternatives. The result: US retail advisers & gatekeepers indicate that six of the Top 10 retail alternatives firms are not pure-play alts managers. While Blackstone and Cohen & Steers carry the top two positions, diversified asset managers make up six of the remaining Top 10, with public-markets giants Blackrock, GSAM and Fidelity hot on their heels, as well as Vanguard, JPM AM and Invesco. Furthermore, over the past five years, some of the biggest gains have been made by Fidelity and Vanguard, reflecting their expansive investments in brand, marketing and distribution. Presumably, these will prove difficult for specialist firms to match. And yet single-year rankings seldom tell the whole story; there is a suggestion that the alternatives' tide could be turning in US retail segments. Enjoying growth in awareness at 1.5X that of their diversified rivals over the past five years, specialist alts firms are ratcheting the pressure. Expanded product availability (via wirehouses, but increasingly RIA firms too) and an accompanying hike in sales force hiring and outreach is having a definite impact. Thanks to Oliver Hesketh, as well as our teams across New York and Boston for sharing their analysis and thinking. BlackRock Goldman Sachs Asset Management Fidelity Investments Vanguard JPM ASSET MANAGEMENT LTD Invesco US

In 2023 we launched our inaugural #PrivateClients Study for the UK, which revealed that wealth managers (and private banks) delivered high levels of satisfaction to clients, despite a challenging external context (economic and geopolitical). Fortunately, equity markets outperformed expectations. Our insights, derived from >4,500 wealth management clients, revealed five themes crucial for fostering positive client outcomes: - While trust is essential, it is genuine client-centricity that wins hearts (and loyalty) - Offerings need to extend beyond solely investment returns to maintain satisfaction when returns are volatile - Clients value communication and content that enhances their financial literacy - Digital tools have become a core requirement, but as a complement to a personalised approach - Emphasizing female clients can be a springboard to stronger advocacy overall For a deeper dive into these insights, our approach to measuring client experience, and participation details for the #2024Study, reach out to Jane Craig from our London office. #wealthmanagement #clientcentricity #inspireinclusion #privatewealth #highnetworth

In 2024, reinsurance rates for Property CAT are now well above those of 2017, with most estimates indicating >50% uplift on a rate-equivalent basis. Early views across the industry in 2024 (from insurers and brokers) are that new rate levels will hold, and/or potentially even edge higher by 'next renewal'. See: https://lnkd.in/gVUcA89e There are many reasons that would support the case for a more robust pricing environment for Property CAT in the years ahead: better data, improved CAT models and levels of climate uncertainty that should raise the bar in terms of underwriting discipline and rationality. And yet history would suggest that a single year of benign experience could be enough to trigger a return to the 'bad habits of old'. So, what lies ahead for #PropertyCAT markets longer term? #reinsurance