Buyers with good records won’t understand the need for a rate hike which is softened by their experience yet still is an uptick.
Buyers with losses will understand but may be willing to go to a deductible, or a higher one, if they feel they have control over their future.
IMHO, more underwriters should offer multi-year Profit Sharing plans, or retros if their filings would allow it. The buyer wins if they truly believe the future is rosy; underwriters win becasue they get their up-front prices with a predictable downside if the buyer was right. And the broker wins because they thought of the idea!
coming up with a retro plan requires you to a) have a considerable amount of premium and b) get a letter of credit or some other security instrument from the insured. Last I checked, credit is tight and getting an LOC isn’t always easy because it ties up company funds.
same thing goes for high deductible plans.
As stupid as carrier pricing has been, we aren’t stupid when it comes to financial risk.
a lot of this is bull…. I’ve been in this for 30 years and can only recall 2 “hard markets” ( 1987 after the stock market crash and for a few months after 9/11)
If the market is to change it goes from soft market to no market – the soft market is the norm.
With all the agency rating and computer underwriting a customer can be presented with a limitless number of options – guys he ain’t t aking the highest one.
We have the perfect storm of a harder market and a bad economy. In the past, when the market got hard, we had a decent economy and everyone was in the same boat so we didn’t worry so much about someone coming in and giving it away to win the account. We could sell service and coverage. Now, the customer is looking at the bottom line and will often buy reduced coverage to get the cost they are looking for. They are also very worried about what the government is going to do to them next so it creates a lot of uncertainty about their future. This scenario makes it very difficult for agents to deal with.
There will be no hard market or even hardening market overall, until capacity is removed. Expect losses to substantially increase for most carriers. Look at the recent dismal results from GEICO & others.
Who can compete against the zombie company known as AIG?
A hard market not only includes price increases, but also restrictions in coverage and higher retentions. I suspect in this climate these two items will preceed significant price increases.
Until the economy improves, buyers will not budget for rate increases. The rare exception might be those with a large amount of losses. An decent underwriting company would take this into consideration and adjust their premium, terms and conditions to reflect this.
The market for new accounts remains at a standstill and with ample capacity average to above average accounts can find terms, conditions and pricing even if their current carrier wants to raise rates.
The market will not see some hardening until there is economic improvement and a reduction in capacity (ex. a major carrier going under).
“Hard Market”,”Soft Market” or even the constant question, “When is the market going to turn” are on the way to becoming anacronisms gang. In fact, you might as well clear some space in the ol’ noggin and make room for the economic realities of the 21st century by simply accepting that all industries are playing by different rules as fueled by the fragility of the global economy,the cynicism and sophistication of today’s buyer and the willingness of government(s)to take over the dynamics of any industry to keep the whole thing from crashing down. McCarran-Ferguson is attacked almost every session of Congress. The only way to the “hard market” of yore is to collude, my friends.(Even a naturally occurring hard market would be accused of having that appearance).Should that dynamic ever take hold (and it won’t), get ready for war on all fronts. Including the one that will be formed by those friendly 99%’ers, if only for good TV…or good YouTube…or whatever.
I think that Hard Market’s are things of the past… Soon it will be only the wise old producers sitting around camp fires telling stories of the myth of a hard market. Just like Customer Service. Both concepts are gone forever. Online rating has made hard markets impossible. Why would a business owner believe there is a hard market, when at any time there could be 10 agents presenting 10 BOPs. Let’s stop talking about the Hard Market that is just around the corner… the hard market is NOT just around the corner. Let’s stop talking about old concepts that hare now irrelevant. Instead of focusing on out-dated ideals, Agencies and Carriers should be focused on how to re-gain their underwriting discipline, and re-develop customer service. Agents who sell on price, loose on price. Does anyone believe in value added service? If the hard market is gone forever,,, and I believe it is, then agencies and carriers will have to find new ways to keep the book profitable. I foresee a future that includes Fee for Services, etc.
What kills me is that Arizona has had profitable property underwriting results for years. We have one bad year, and rates on property here shoot up, at least for me (Encompass and Safeco). What’s up with that?
This is a significant conundrum.
Buyers with good records won’t understand the need for a rate hike which is softened by their experience yet still is an uptick.
Buyers with losses will understand but may be willing to go to a deductible, or a higher one, if they feel they have control over their future.
IMHO, more underwriters should offer multi-year Profit Sharing plans, or retros if their filings would allow it. The buyer wins if they truly believe the future is rosy; underwriters win becasue they get their up-front prices with a predictable downside if the buyer was right. And the broker wins because they thought of the idea!
coming up with a retro plan requires you to a) have a considerable amount of premium and b) get a letter of credit or some other security instrument from the insured. Last I checked, credit is tight and getting an LOC isn’t always easy because it ties up company funds.
same thing goes for high deductible plans.
As stupid as carrier pricing has been, we aren’t stupid when it comes to financial risk.
a lot of this is bull…. I’ve been in this for 30 years and can only recall 2 “hard markets” ( 1987 after the stock market crash and for a few months after 9/11)
If the market is to change it goes from soft market to no market – the soft market is the norm.
With all the agency rating and computer underwriting a customer can be presented with a limitless number of options – guys he ain’t t aking the highest one.
We have the perfect storm of a harder market and a bad economy. In the past, when the market got hard, we had a decent economy and everyone was in the same boat so we didn’t worry so much about someone coming in and giving it away to win the account. We could sell service and coverage. Now, the customer is looking at the bottom line and will often buy reduced coverage to get the cost they are looking for. They are also very worried about what the government is going to do to them next so it creates a lot of uncertainty about their future. This scenario makes it very difficult for agents to deal with.
thanks Washington…
There will be no hard market or even hardening market overall, until capacity is removed. Expect losses to substantially increase for most carriers. Look at the recent dismal results from GEICO & others.
Who can compete against the zombie company known as AIG?
A hard market not only includes price increases, but also restrictions in coverage and higher retentions. I suspect in this climate these two items will preceed significant price increases.
companies using CLUE/motor vehicle reports etc to underwrite; yet they miss obvious stuff the field sees
Until the economy improves, buyers will not budget for rate increases. The rare exception might be those with a large amount of losses. An decent underwriting company would take this into consideration and adjust their premium, terms and conditions to reflect this.
The market for new accounts remains at a standstill and with ample capacity average to above average accounts can find terms, conditions and pricing even if their current carrier wants to raise rates.
The market will not see some hardening until there is economic improvement and a reduction in capacity (ex. a major carrier going under).
“Hard Market”,”Soft Market” or even the constant question, “When is the market going to turn” are on the way to becoming anacronisms gang. In fact, you might as well clear some space in the ol’ noggin and make room for the economic realities of the 21st century by simply accepting that all industries are playing by different rules as fueled by the fragility of the global economy,the cynicism and sophistication of today’s buyer and the willingness of government(s)to take over the dynamics of any industry to keep the whole thing from crashing down. McCarran-Ferguson is attacked almost every session of Congress. The only way to the “hard market” of yore is to collude, my friends.(Even a naturally occurring hard market would be accused of having that appearance).Should that dynamic ever take hold (and it won’t), get ready for war on all fronts. Including the one that will be formed by those friendly 99%’ers, if only for good TV…or good YouTube…or whatever.
I think that Hard Market’s are things of the past… Soon it will be only the wise old producers sitting around camp fires telling stories of the myth of a hard market. Just like Customer Service. Both concepts are gone forever. Online rating has made hard markets impossible. Why would a business owner believe there is a hard market, when at any time there could be 10 agents presenting 10 BOPs. Let’s stop talking about the Hard Market that is just around the corner… the hard market is NOT just around the corner. Let’s stop talking about old concepts that hare now irrelevant. Instead of focusing on out-dated ideals, Agencies and Carriers should be focused on how to re-gain their underwriting discipline, and re-develop customer service. Agents who sell on price, loose on price. Does anyone believe in value added service? If the hard market is gone forever,,, and I believe it is, then agencies and carriers will have to find new ways to keep the book profitable. I foresee a future that includes Fee for Services, etc.
What kills me is that Arizona has had profitable property underwriting results for years. We have one bad year, and rates on property here shoot up, at least for me (Encompass and Safeco). What’s up with that?