“We’ve been cautious up to now about declaring a market turn, but I think it’s reasonable to say that the market has made a hard turn after two quarters of price increases and tighter underwriting,” said Ken A. Crerar, president/CEO of The Council. “It’s difficult to predict length and severity, but the market has turned.”
A broker from the Midwest summed up the past quarter market environment: “Insurers sought rate [price] increases of five percent-plus across the board. For those accounts with losses, higher rate [price] increases were sought. For those risks, other markets were more selective in considering than in prior years.” A broker from the Northwest said, “Most carriers were asking for a five-to-eight percent increase depending on the line of business. DIC, earthquake and flood all increased about 25 percent or coverage is hard to find.”
The rising cost of natural disasters clearly had an impact on insurer pricing, particularly for coastal properties, as insurers embraced new modeling programs such as RMS11.
“We manage coastal property and pricing increased due to RMS 11, substantially on some accounts,” a broker form the Southeast said. Brokers in the Northeast experienced much the same. “RMS 11 treaty reinsurance price increased and the general market for companies with CAT-prone properties made carriers dictate structure, terms and premium increases.”
Workers’ compensation toughened as carriers raised prices or rejected the business. Sixty-eight percent of brokers responding said workers’ compensation prices increased 1 percent to 10 percent in the first quarter of the year. A broker in the Southeast commented, “Workers’ compensation was up with any kind of losses or up just a little even with no losses. Certain classes were not being accepted like they were.” A broker in the Northwest said, “Workers’ compensation increased in pricing or many carriers are non-renewing accounts.”
In an indication that the economy may be improving, 59 percent of respondents said demand for insurance was up in the first quarter, compared to 53 percent who said demand did not improve in the previous quarter.
The economy and the federal budget and deficit continue to weigh in as the top political issues facing the country. However, the issue that keeps brokers awake at night is attracting new talent to the business.