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Investor Caution in the Wake of a Hard Insurance Market

The insurance industry is facing a hard market thanks to multiple factors including the COVID pandemic. Hard markets are a time of high insurance premiums, more precise and complex underwriting, fewer policies being written, and a shrinking pool of competitors. With that in mind, insurers are raising money to make the most of opportunities as they arise. At the same time, investors are understandably cautious.

Intelligent Insurer details a recent panel discussion on hard markets with commentary from Stefan Holzberger of AM Best and Jon Warwick of ILS Capital. The experts predict how investors may respond to hard market conditions and how that will impact the insurance industry in the coming months.

Holzberger notes that factors affecting the market cycle include low-interest rates, loss creep from previous catastrophic events, and litigation finance. He predicts a sustained hard market. Lit fin can be a particular thorn in the side of insurers, since it affords ordinary people the opportunity to pursue insurance claims even after they’ve been denied.

Warwick explains that while investor confidence is favorable, capacity is reduced. This reduced capacity can create more difficult conditions for reinsurance programs. That’s bound to cause a spike in prices. In some areas, rates have increased as much as 75%.

While some factors were in place even before the start of the year, the uncertainty brought about by COVID has brought extreme volatility to the market. Holzberger predicts that this rate of hardening will continue to increase and intensify. Warwick predicts that rate hikes will impact territories and classes differently. He refers to one company that doubled its insurance—causing premiums to go up a shocking 1,000%.

Both experts predict good things for the future of the insurance industry. Despite some difficulties, the market is well-capitalized with solid liquidity.  

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Community Spotlight: Guillermo Ruiz Medrano, Attorney, CUATRECASAS

By John Freund |

Guillermo Ruiz Medrano is a Spanish lawyer based in Barcelona, specializing in advising local and international clients on litigation finance deals and restructuring transactions, with a focus on international and cross-border deals, and engaged in the implementation of cutting-edge litigation funding structures.

Company Name and Description: CUATRECASAS - a leading multi-disciplinary Spanish law firm, providing comprehensive legal services to clients across various industries. With a strong presence in Spain, Portugal, and Latin America, among others, the firm is recognized for its innovative solutions and commitment to excellence.  

Company Website: https://www.cuatrecasas.com/en/spain/

Year Founded: 1917

Headquarters: Barcelona and Madrid (Spain).

Area of Focus: Litigation Funding and Restructuring

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In her own post on LinkedIn, Colantonio provided the following comment: “Excited to step into the role as Chief Investment Officer at Litigation Lending Services Limited! A big thank you to the leadership team for their trust and support. Looking forward to driving our mission forward and exploring new opportunities in litigation funding.”As LFJ reported in August of this year, Colantonio was recently appointed to the board of The Association of Litigation Funders of Australia (AALF) as a non executive director, replacing LLS’ own Stephen Conrad in that position.