There is a renewed sense of opportunity in the global (re)insurance industry, with pricing finally rebounding after years of reducing rates and anaemic returns.

However surging loss costs in the US casualty market in particular have been a theme of the third-quarter results season, with issues spread across commercial auto, general liability, medical malpractice and D&O creating mounting fear within the market.

In particular, concerns over social inflation and a challenging tort environment in these lines continue to be a prevailing theme, with several carriers stressing that the impact of these trends may not be fully understood for many years to come – providing the market with a real sense of “fear” for the first time in years.

We have also witnessed a renewed emphasis on underwriting discipline in 2019 with market participants citing income statement pressures and a change in risk appetite as the predominant drivers of the change in the pricing environment. However, the question remains how long this discipline will last without further losses from either catastrophes or emerging balance sheet issues from long-tailed lines. Indeed, the market is likely to see the true test of its renewed rationality on competition towards the middle of next year when accounts that saw significant increases last year are up for renewal and face the prospect of “rate on rate”. At that point, we will have a true test of whether there is more fear or rate in the market, and whether the excess supply of capacity on the side-lines will reassert itself and compete away the gains.

Join the Insider US on Thursday, 14th May, right as the rubber will be meeting the road on the “rate on rate” question, to understand exactly what to expect from the market in 2020.