Pricing close to bottom of cycle: Charman

The insurance market is nearing the bottom of a very aggressive pricing cycle and competition in the market is healthy, according to John Charman, chief executive of Endurance.

Charman was speaking at the Standard & Poor's Ratings Services' 30th Annual Insurance Conference, where he added that the secret of underwriting is to have an embedded knowledge of the underlying risk.

“That flow of capital into our business in search of higher returns is inevitable," said Charman. “It's created a more-competitive landscape, and it's also changed underwriting behaviour.”

Charman said that the vast quantity of alternative capital entering the market, which is estimated to be as much as $100 billion during the next five years, is accelerating competition within the insurance space.

But "it's strong, healthy competition that we're facing," said Charman, who added that it's the underwriting discipline and expertise that distinguishes reinsurers amid mounting competition.

"The secret of underwriting is to have an embedded knowledge of the underlying risk, to be able to manage exposures and risks." he said.

But he believes the downward pressure is starting to come to an end. “We are beginning to get to the bottom of a very aggressive pricing cycle. You always know you're getting to the bottom when terms and conditions start to expand."