Hoping to spark a discussion of so-called “super regional” insurance carriers, Insurance Journal magazine (Feb. 12 issue) this week is publishing its first list of Super Regional Property Casualty Insurers™, as developed by the actuarial consulting firm Demotech, Inc. A total of 139 individual insurers made the list.
A number of property casualty insurers call themselves “super regionals” as a way to differentiate themselves in the marketplace. Yet until now, there has been no industry-wide, objective definition of what a “super regional” is.
“In their efforts to distinguish themselves, many regional insurers have begun referring to themselves as ‘super.’ But everyone seems to have a different understanding of what that means,” said Joseph Petrelli, president, Demotech, an actuarial consulting firm based in Columbus, Ohio.
Insurance Journal asked Demotech, Inc., its official research partner, for help in opening discussion on a definition for this group of insurers.
Demotech Classification System
The experts at Demotech responded with their own classification system for property casualty insurance companies. The Demotech Company Classification System categorizes all property casualty insurers into one of 11 categories based on Demotech’s analysis of the data reported by the companies to the National Association of Insurance Commissioners.
The 11 categories are Nationals, Near Nationals, Super Regionals, Regionals, State Specialists, Coverage Specialists, Strategic Subsidiaries, Risk Retention Groups, Surplus Lines Carriers, Reinsurers and companies with less than $1 million in direct written premium.
The first list
The Feb 12 issue of Insurance Journal magazine, focusing on the Super Regional Property Casualty Insurers™, presents the first report based on Demotech’s classifications.
In general, a Super Regional Property/Casualty Insurer™ is an individual company writing multiple lines of insurance in multiple states. Risk retention groups, surplus lines insurers and reinsurers are not included.
Utilizing specific objective, quantitative criteria, Demotech identified 139 Super Regional Property/Casualty Insurers™. They are presented in the Feb 12 Insurance Journal Special Report both alphabetically by name and ranked ranked by direct premiums written as of Sept. 30, 2006. The full report also includes the states in which the regional carriers write a minimum amount of business.
Among the well-known companies that made the list (in no particular order) are Erie Insurance Exchange, Progressive Northern, Westfield, Peerless, Hanover, Grange Mutual, General Casualty, Selective, California Casualty Indemnity and Utica Mutual. (For the complete list and information on reprints, see below.)
Super Regional criteria
To select the companies for the Super Regional Property/Casualty Insurer™ list, Demotech used these specific, objective qualifying criteria and thresholds:
• Active, individual companies not in regulatory supervision at Dec. 31, 2005;
• Companies reporting data to the National Association of Insurance Commissioners using the property/casualty annual and quarterly statement format;
• Companies with more than $1 million of direct written premium in each of two to 34 states at Dec. 31, 2005;
• Companies with less than 90 percent of their direct written premium in any one state at Dec. 31, 2005;
• Companies with less than 90 percent of their direct written premium in any one line of business at Dec. 31, 2005;
• Companies with $100 million of surplus or more at Dec. 31, 2005 and also at Sept. 30, 2006;
• Companies with net written premium of at least $50 million at Dec. 31, 2005; and
• Companies with direct premium written of at least $25 million at Dec. 31, 2005 and greater than $0 at Sept. 30, 2006.
Insurance Journal and Demotech say they hope this report sparks a discussion on Super Regionals, including the criteria used in this listing, so that future reports can more accurately articulate an industry definition.
“Companies may question the selection criteria and thresholds that resulted in the current list of Super Regionals. Our selection criteria were quantitative and transparent and we welcome the opportunity to discuss the process with carriers that have suggestions or further insight,” notes Barry J. Koestler II, CFA, senior financial analyst and chief ratings officer, Demotech.
The authors stress that this report is not about ratings of the individual insurers. Inclusion in no way suggests that companies on this list are superior to companies that did not make the list.
“Super Regionals must effectively compete against State Specialists, Nationals and Near Nationals as well as provide responsive coverages required by insureds,” adds Sharon M. Romano, CPCU, AIAF, CCP, ARC, vice president at Demotech. “While Demotech’s criteria were intended to identify the companies capable of meeting these dual objectives, we acknowledge that the initial criteria may have eliminated some fine companies from this list.”
Begin the discussion
Future issues of Insurance Journal will report on other Demotech Company Classification System categories including State Specialists and Nationals. With this week’s publication of the first list of Super Regionals and specified criteria, the authors urge the industry discussion to begin.
“As the criteria are updated, future lists could very well highlight some different insurers. The objective is to develop the best possible definition,” adds Andrew G. Simpson, Insurance Journal vice president for content.
For a copyrighted alphabetical listing of the Insurance Journal-Demotech Super Regional Property Casualty Insurers™, see the attached pdf.
For the complete Super Regional Property Casualty Insurers™report, including the 139 insurers ranked by direct premium written, the states they write in, and a chart of the Demotech Company Classification System, see the Feb. 12 issue of Insurance Journal magazine, or order reprints of the full report contact firstname.lastname@example.org
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