Orlando, Fla. – Just how long will the hard market last?
That question has been debated and debated endlessly as insurance industry analysts try and arrive at the same conclusion. Several analysts attempted to answer that question as the 15th Annual PLUS Conference wrapped up late Tuesday afternoon with a look at the state of the industry.
Vincent Dowling of Partners Securities noted that, “The cycle is going to last longer than people anticipate. We’re only in the third or fourth inning of things playing out.”
As Jay Cohen of Merrill Lynch & Co. noted, “The market was already under pressure prior to the Trade Center.” Dowling pointed out that 9/11 showed that non-correlated risks are correlated.
Ron Frank of Salomon Smith Barney addressed the issue of a number of companies having trouble raising capital. “The market turns back when it doesn’t see talent in place.” Dowling noted that things are being shut down because no one wants them, adding, “January 1 is going to be tough on the casualty markets. The stock market doesn’t know how tough this is going to be.”
The panel also addressed the issue of companies leaving certain markets, with Frank pointing out, “We’re seeing companies withdrawal from markets to concentrate on their strengths. Companies are looking at where they’ll earn their return.”
As for the professional liability market, Dowling remarked that there is a whole generation from 1986 on that had never witnessed prices going up until the last 12 months.
And when it comes to litigation, Cohen noted that, “The litigation environment is out of control. People are doing so much to avoid being sued. It is extending industry by industry.”
The panel discussion wrapped up two days of workshops and educational sessions. The 2003 PLUS Conference will take place Nov. 9-12 in Philadelphia.
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