Briefing: 1 January 2024 renewals evidence of the end of the world’s ‘holiday from history’

By Yiannis Kotoulas 

When I was studying history at university, there was a popular theory known as ‘The End of History’ that rankled me every time I encountered it. 

It comes from a 1992 book of the same name by American political philosopher Francis Fukuyama and posits that, following the end of the cold war with the dissolution of the Soviet Union in 1991, humanity reached the end of history. 

While Fukuyama was referring to the ascendancy of liberal democracy as a global governmental type, his theory has been misunderstood by others and used to suggest that the momentous events of the past will remain in the past, with nothing on the scale of the Second World War able to happen again in the present because of the highly interlinked global system. 

Many in the insurance sector – and perhaps particularly those working within the London market – will recognise this naivety outright.

Of course momentous, historical events continue to happen all the time – and the reinsurance renewals on 1 January (1/1) prove it. 

The annual 1/1 reinsurance renewals provide insurers with an indication of the costs they will bear for reinsurance.

In its A New World report, global broker Howden noted: “Nuanced conditions across the (re)insurance market reflect a period of turbulence since the turn of the decade that has brought about new marcoeconomic and geopolitical realities and reset loss expectations.”

It added that events like Covid-19, the wars in Ukraine and Gaza had “brought cascading effects by resetting macro-fundamentals and disrupting supply chains, as well as extending the current insurance cycle”. 

Howden noted that, despite the current year representing a period of rapid technological development, it was striking to find that more traditional risks like global pandemics, war, energy insecurity, inflation and interest rate spikes had dominated the decade so far. 

“The fallout from these megatrends is now crystallising,” the report added.

”The higher costs of goods and capital, civil unrest, deglobalisation and heightened security threats have ended the world’s holiday from history and transformed risk perceptions for businesses and (re)insurers.” 

Looking forward

So, considering all of that, perhaps the insurance sector has something to say to Mr Fukuyama. 

And despite all of the turmoil, leading to the necessary creation of new terms such as polycrisis or permacrisis, Howden’s report notes that “increased capacity and competition in both the reinsurance and commercial markets through 2023 has benefited buyers, which portends well for 2024”. 

The outlook is much more positive than a year ago, when many moving in the reinsurance market said that those renewals were the toughest they had seen in years. 

Commenting on this year’s recent renewals, Howden Tiger chief executive Tim Ronda said: ”The reinsurance market has stabilised after last year’s exceptionally challenging renewal.

“Reinsurers were relatively unscathed by large losses in 2023, due in part to more favourable terms and conditions, including higher risk retentions and attachment points.” 

However, a more favourable outlook does not mean the dying down of all headwinds.

Howden founder and chief executive David Howden put it best: ”Risks are escalating as the world lurches from one crisis to another. The value of risk transfer comes to the fore during such volatile times.

“This is the moment for brokers and carriers to step up and apply our intellectual and financial capital to find creative solutions that safeguard the insurability of assets exposed to a myriad of risks, including climate change, geopolitical instability and rapid technological advancements.” 

End of history indeed…