Increased sophistication by insurers and reinsurers in analyzing and mitigating their catastrophe exposures has led to fewer and milder swings in property rates and renewal terms. Models and monitors of exposures are two factors that have yielded better projections, protective terms, and underwriting. Use of current results as a lead indicator of market rates is weakened by the long term nature of catastrophe losses. Financial results must be averaged over longer time periods than a calendar year due to wide variances of catastrophe frequencies by year and type. Proactive insurance company management is on their game in this regard, thus industry reaction has been tempered to date. But the financial world outside insurance is driven by calendar period results. So, investors’ “what have you done for me (my portfolio) lately” mentality indicates that the tipping point may be near.
I’ve been reading articles like this for years now. Hasn’t happened yet. Isn’t going to happen until significant capital gets sucked out of the market or a major player goes under.
Increased sophistication by insurers and reinsurers in analyzing and mitigating their catastrophe exposures has led to fewer and milder swings in property rates and renewal terms. Models and monitors of exposures are two factors that have yielded better projections, protective terms, and underwriting. Use of current results as a lead indicator of market rates is weakened by the long term nature of catastrophe losses. Financial results must be averaged over longer time periods than a calendar year due to wide variances of catastrophe frequencies by year and type. Proactive insurance company management is on their game in this regard, thus industry reaction has been tempered to date. But the financial world outside insurance is driven by calendar period results. So, investors’ “what have you done for me (my portfolio) lately” mentality indicates that the tipping point may be near.
I’ve been reading articles like this for years now. Hasn’t happened yet. Isn’t going to happen until significant capital gets sucked out of the market or a major player goes under.