Insurance markets are adept at identifying the risks in front of them. The greater challenge is remembering the ones they have already encountered.
That, according to Kirstie Keate (pictured), chief underwriting officer for short-tail lines at Volante Global, is the risk emerging as property market conditions soften. Pricing pressure is increasing, capacity is returning and competitive intensity is rising across parts of the market. The danger is not simply that rates fall, but that underwriters become so focused on today's concerns that they overlook lessons learned from previous cycles.
Having spent more than three decades in insurance, including senior roles at Commercial Union, RSA and Lloyd's, Keate has seen those cycles repeat often enough to recognise the warning signs.
One of the biggest misconceptions in current market commentary, Keate said, is the tendency to treat short-tail property as a single market.
Conditions vary significantly by geography. In the Nordics, structural changes have left capacity relatively constrained, helping preserve pricing discipline. In Canada, by contrast, increased competition has contributed to a much sharper decline in rates.
"If I look at what's going on in the Nordics on the property book compared to what's going on in say Canada for the property book, they're very different market conditions," she said.
The distinction matters because underwriting decisions that make sense in one territory may be inappropriate in another. Broad assumptions about pricing adequacy or market conditions risk obscuring the factors that ultimately determine profitability.
The clearest sign of softening conditions is visible in pricing.
"It's always price erosion at the beginning, and that's definitely what we're seeing," Keate said.
Customers and brokers are increasingly aware that premiums rose sharply during the hard market and are now pushing for reductions. Yet Keate does not believe the industry has returned to the looser underwriting standards that characterised previous soft cycles.
"We're not back in the old soft market where anything went – not just any extension, but any wording for that extension as well," she said. "It's still largely pricing."
What concerns her more is the volume of new capacity entering the market, particularly through MGA structures and facility arrangements. While she described MGAs as an important source of innovation and customer solutions, she argued they need to be deployed with care.
"It's about making sure you're using an MGA for the right purposes – to deliver a solution to a customer rather than to flood the market with even more capacity," she said.
Facilities and bundled portfolios require particular scrutiny, she added, because capacity decisions are being made across groups of risks rather than on an individual basis.
The challenge for underwriters is balancing growth ambitions with long-term profitability. Keate rejected the idea that discipline and growth are inherently in conflict, noting that strong premium growth alone does not guarantee stronger returns.
"Even when the market's hard, it's still a challenge because your reinsurance costs are going up," she said. "Just because premiums are going up on the front end doesn't mean you're necessarily going to make profit."
At the same time, she argued, underwriters cannot lose sight of customer needs.
"If you want to grow, you need customers – it's as simple as that," she said. "Coming up with an idea that we're not going to give away any rate this year is fine, but if you're not giving a customer anything, then you're not going to grow."
Asked whether the industry risks repeating past mistakes, Keate's answer extended beyond insurance.
"Probably," she said. "It's not a short-tail thing, it's not an industry thing, it's a humanity thing."
Her concern is that markets often become consumed by the issue attracting the greatest attention while neglecting other vulnerabilities. She pointed to the period before the pandemic, when catastrophe losses dominated discussions across the industry.
"When we were all focusing on catastrophe risk because of the hurricane losses, we overlooked things like the strength of our wordings, which kind of opened the door to things like all the COVID claims," she said.
For Keate, the lesson is that underwriting decisions cannot be viewed in isolation. Pricing, exposure, policy wordings and portfolio performance are interconnected, and focusing too narrowly on any one issue can create vulnerabilities elsewhere.
"You might drop your price – and then what does that do to your overall combined ratio? Or you put your price up, but then your income comes down," she said.
"Once we stop thinking holistically and focus on just the hot topic, we are always going to forget the lessons of the past."
