The Demex Group

Yet another report has been published on the impact of severe convective storms. It is good to see the topic receive increasing airtime, given its position as the largest driver of insured losses. However, there are still very few options to manage the impact on carriers’ balance sheets. The Demex Group is proud to have developed a breakthrough reinsurance solution that more and more P&C carriers, reinsurance brokers, and capacity providers are choosing. We know nat cats grab the headlines. We need to keep raising the profile of storm losses and improve the financial sustainability of carriers with more solutions. Read the CoreLogic report in Carrier Management - https://lnkd.in/eFU2yUTu #severeconvectivestorm #reinsurance

It's great to see US personal lines underwriting results improving (AM Best's Review & Preview Report https://lnkd.in/eMxBiQfD), however, results continued to be impacted by the frequency of severe convective storms and challenges of obtaining reinsurance. The report indicates lower combined ratios come from increased rates/deductibles and improved risk selection, aka non-renewal/declining risks. I see this as good short-term financial management, but the challenge for carriers is the resultant lack of portfolio growth and the fact it does nothing to protect them from accumulated storm losses. Obtaining convective storm risk transfer / reinsurance solutions is a valuable tool for all insurers to protect their earnings and surpluses, beyond the near-term tactical actions they’ve taken in the past year – and simultaneously creating opportunities for growing their book. #ambest #reinsurance

Last week, James Vickers, Chairman of Gallagher Re said premium growth for reinsurance is going to be a challenge in 2025. Insurance carriers are not keen to pay increased rates for reinsurance and are unable to purchase reinsurance where they really need it - for attritional losses - notably from severe convective storms. Carriers' can only raise their premiums and deductibles so much. It is the lack of reinsurance that is really hurting them. An answer lies in reinsurance for severe convective storms via The Demex Group’s breakthrough reinsurance solution to cover accumulated insured losses. It has reopened a previously closed market, proved itself and attracted the support of major reinsurance brokers. The reinsurer growth opportunities here are significant. So, if you are a reinsurer or reinsurance broker, how are you planning on responding to James’ question of, “….what they can do about increasing their premium volume or achieving their premium growth targets that they’ve got in 2025.”? 

Another report, stating massive severe convective storm loses of $64 billion in 2024 - 59% above the 10-year average. This time from Gallagher Re and published in Business Insurance https://lnkd.in/etZYnZBA. The challenge is the accumulation of these losses have little, or no, reinsurance backstop - unlike hurricanes or wildfires. That's why The Demex Group are 'market makers' creating reinsurance solutions for severe convective storm losses. What to know more? DM me to arrange a briefing.

If there is a silver lining in the terrible tragedy happening in LA, it is encouraging from a societal standpoint that the complicated relationship between weather, human behavior, climate change, finance/insurance and political policies is starting to get some visibility. While there are any number of conspiracy theories and attempts to blame political opponents, the fact is that the fundamental relationships between these different variables is very difficult to manage, and the status quo – unfortunately – was betting against the kind of situation that has now occurred, and it will all have to be paid for.    Rather than simply bashing the insurance industry, it is good to see several commentators explaining the need for stable, sustainable, insurance solutions that work for all parties. Yesterday's Washington Post article https://lnkd.in/exQVDWX2 is a good example, with the interconnection between all of these factors being explained to the general public. It’s unclear how all of this will be sorted out as the LA area rebuilds, but I would expect that things that have been unaddressed – the challenges of creating effective state legislation, ensuring adequate reserves and availability of construction materials, etc. – will now be front and center. Hard to say what the end result will be, in terms of impact on residents of California, but it seems pretty certain that things cannot go back to the way they were. Scary on many levels, but hopefully some positives can come of it. Photo by Benjamin Lizardo on Unsplash