David Flandro joins AM Best TV at Insurtech Insights USA 2025
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David Flandro, Head of Industry Analysis and Strategic Advisory, Howden Re spoke with Lori Chordas, AM Best TV, ahead of his panel during the conference.
David said one of the key interests in the market today is emerging risks, which he believes may be the thing that has driven the sector most over the last five years.
“Right now, we’re in an environment where risk premia are globally elevated,” said Flandro. “Whether it’s because of trade disputes, war risk, interest rate risk, or inflation risk; all of these things are coming to the fore.”
This leads to heightened hurdle rates for investors, increases pricing in reinsurance and primary lines, and it has implications for capital and interest rates.
“Elevated risk premia are driving pricing, they’re driving claims trends, they’re driving investment flows, and they’re driving capacity, so it really is the central question that we have to address,” Flandro said.
Chordas also asked Flandro about the increasing role ILS plays in closing the protection gap amid rising secondary perils and catastrophe losses.
Flandro said when looking at the data, ILS now accounts for nearly 25% of total dedicated reinsurance capital.
“ILS has played a crucial role in the last several renewals because many times, ILS is really the only thing that’s coming in the upper layers,” said Flandro.
Flandro also discussed the increase in secondary perils globally, and how they have outweighed primary perils in the last five years. Plus, he said interest rate spikes have caused the most market disruption.
“Do you know what the biggest price driver of the last three or four years has been? It hasn’t been a big insured catastrophe loss. It was the 400-basis points interest rate spike in 2022 that happened in the wake of inflation,” said Flandro.
He noted that that spike drove industry capital down by about 17%, which was the impetus for the reinsurance hard market, adding that it’s one of many blind spots that have come in the market.
Watch David’s interview