Deloitte’s Johal on growth, M&A, and talent: “Specialty lines and technology are driving the future”
The (re)insurance sector is set for significant shifts, driven by specialty growth, a focus on climate, and heightened M&A activity, according to Guru Johal, vice chairman and partner and global speciality and reinsurance markets leader at Deloitte.
Speaking to The Insurer TV last month at the RVS industry gathering in Monte Carlo, he said: “Growth was a major theme, particularly in the US mid-market, with specialty lines leading the way.”
He pointed to the hard market's "phenomenal results", but warned that navigating a softening market would require insurers to get the right products into these growing areas.
Technology, particularly in cyber and climate risks, is pushing the boundaries of traditional market cycles. “The importance of recognizing accumulation risks and underlying exposures is critical,” Johal added, as insurers pivot to meet new challenges.
M&A also took centre stage, with Johal noting that despite rising interest rates, “there's still appetite for strategic expansion”, especially in the specialty lines space.
Private equity firms are active, particularly in the broking and distribution chains, while carriers are taking a more focused approach. “Carriers are looking to add to their portfolios in ways that complement their strategies,” he said, stressing the importance of precision in these deals.
The role of insurance in addressing global climate risks remains crucial, as Johal highlighted, “from island nations to large corporates and SMEs, the impact is widespread”. Insurers must stay agile, harnessing the right data to underwrite and price climate exposures effectively.
On regulation, Johal pointed to ongoing challenges around aligning policy with risk-based analyses, especially as regulators push for affordability and availability of cover. “The alignment of capital to back risk will need collaboration across the industry, and that’s already happening in parts of Europe,” he noted.
Finally, the industry's talent strategy must evolve to meet the growing demands of technology and data.
“The agility of talent and organizations is going to differentiate the winners over the next three years,” Johal said.
Attracting tech talent – such as data scientists and engineers – is becoming imperative. He added, “We’re seeing insurers hire more scientists and mathematicians to help underwriters select and price risks more accurately.”
Watch the full, wide-ranging interview with Deloitte’s Guru Johal for more insights on the topics and issues influencing dynamics in the global (re)insurance markets.