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Episode 37 of 98

37: Terms & conditions, the need for precision - Prospectus 2021 conference

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This was the fourth session of Prospectus 2021, a new annual reinsurance and insurance-linked securities (ILS) conference brought to you by Artemis in collaboration with sister title Reinsurance News in November 2020. The session focused on terms and conditions (T&Cs) and explored both the loosening during the soft market period, and the expectation of continued tightening as the market enters 2021. Strengthening terms of insurance and reinsurance, both to improve the clarity of coverage and precision of payouts when loss events occur, is seen as a key way to enhance the product and also the underwriting returns of companies in the sector. During the panel, it was highlighted that in the ILS space there’s already been a focus on quota share terms, there’s been a toughening up on aggregates, and also a shift away from cascading coverages as market players look to secure more favourable T&Cs. But while progress has clearly been made, is this enough or is there a lot more to do at the renewals? The panel featured Heather Kitson, Deputy Chief Executive Officer (CEO) of Convex Re, Michael Millette, Founder & Managing Partner, Hudson Structured Capital Management and James Parker, Chief Claims Officer at AXIS Re. The discussion covered the continuing shift to named peril coverage and how certain areas of the market were already ahead on this, such as catastrophe bonds. It also covered the need for alignment between parties and how this can overcome terms confusion. Both cyber risks and so-called intangible risks were also discussed, with the panel concluding that the industry needs to work on terms to contain these and other areas of insurance and reinsurance where difficult to predict losses may lie.