P&C insurers should return to 2004 terms

Property and Casualty (P&C) insurers need to return to the technical underwriting levels of 2004, claimed Philippe Jouvelot, AXA Corporate Solutions' P&C chief underwriting officer.

The terms and conditions that insurers were underwriting property and casualty risks at in 2004 were ‘technically adequate’, according to Jouvelot. Since then fierce competition has forced prices down ‘artificially’ and softened the market.

Insurers will do everything possible to return to technical pricing, insisted Jouvelot. ‘Now we are at the bottom of the cycle and the market must harden,’ he insisted.

Jouvelot also suggested that certain factors in play at the moment could influence the amount of capacity in the market, which could make this phase of market hardening more brutal.

“Cash flow underwriting is unsustainable

Philippe Jouvelot, AXA Corporate Solutions' chief underwriting officer P&C

‘In past upturns there was new capacity entering the market which could have smoothed the insurance cycle a bit,’ he said. ‘But today there are very few new investors putting capital into the insurance market.’ He also explained that several insurers getting into financial trouble has reduced the solvent capacity that is available.

The drop in the value of sterling has also influenced the amount of risk capital available to European businesses, he said, because of the sheer size and importance of the London (re)insurance market.

Jouvelot reaffirmed that insurers have to return to the adequate pricing levels last seen in 2004 because cash flow underwriting is ‘unsustainable’. The news came as Jouvelot delivered a presentation to AXA Corporate Solution's clients and brokers in Zurich, Switzerland.