03 · Evidence

This is a live argument

It is the current renewal cycle, the current capital cycle, the current supervisory window. The reinsurance market is already pricing it, and every figure below comes from a primary source.

The shape of insured losses no longer matches the shape the industry’s models assume. The industry’s own sources say so.

⅓
of syndicates with material transition and litigation risk ratings cannot quantify their current exposures

The other two-thirds are pricing more sharply and selecting better.

Lloyd's, Climate Risk Capital Modelling Market Trends, July 2025
10%
uncertainty load at reinsurance renewal

Paid by cedants with poor or inconsistent data quality. For a £200m reinsurance spend, the differential runs £6m to £16m a year.

Supercede industry study, 2023
3×
loss creep, Italy hail 2023

Initial estimate USD 2.2bn; final near USD 6bn. Swiss Re named the cause: exposure data not shared at the granularity required.

Swiss Re, 2024
60%
of wildfire loss growth is hazard intensification

Only 40 per cent of North American wildfire insured loss growth is explained by exposure growth. Historical models do not capture the rest.

Swiss Re sigma 1/2026
The commercial case
From scenario to capital provider: four links, each with a commercial consequence.

A scenario sharp at the desk is sharp in the model. A wider tail lifts the SCR; more capital for the same result is a lower return; a weaker return shapes what the provider allocates. Data quality is a traded signal.

SCR
the capital the model requires
CAPITAL DEPLOYED
Funds at Lloyd's committed
RETURN ON CAPITAL
profit / capital
CAPITAL PROVIDER
allocates across syndicates
The same chain, two outcomes
Integrated firm
SCR set on credible scenarios, validated, and explainable to providers
Capital position defensible to the PRA - no supervisory challenge on SCR adequacy
Providers price against transparent evidence, with no ambiguity load
Higher capital reads as discipline, rewarded with stable allocation
Non-integrated firm
SCR exposed to supervisory challenge on adequacy - capital imposed, not chosen
Internal assessment may sit too low; exposure builds in the loss ratio
Providers default to an ambiguity load; capital priced more conservatively
Higher capital reads as the regulator forcing a number not seen

Same capital posture, two readings: discipline rewarded, or imposition absorbed. The difference is whether the firm has built the architecture to explain its own numbers.

Sources: Lloyd's, Climate Risk Capital Modelling: Market Trends, July 2025 · Supercede, industry whitepaper on cedant data quality and reinsurance pricing, 2023 · Swiss Re Institute, sigma 1/2026 and commentary on the 2023 Italy hail loss development, 2024 · CRESTA, Italy hailstorms estimate, July 2023 · Aon, 2026 Climate and Catastrophe Insight · Munich Re and Howden Re, January 2026 · PRA Supervisory Statement 5/25, 3 December 2025. The full list of primary sources is in the position statement.