Agent,
Carriers are taking rate this year as they cannot rely on investment income alone to build profitability.
The rate increases started on the CGL side as companies were looking to shed unprofitable business, and it has continued to property after the series of catastrophes.
With a reliance on underwriting to make a profit, carriers are willing to sacrifice premium volume to have better results.
If I were to make a comparison, it is like being an oil rich nation (ex. Russia or Saudi Arabia). You eventually come to the point where it is simply not profitable for you to keep pumping oil and export it to other countries. Hence, you reduce the amount of oil you produce and raise your prices. Unfortunately, that affects both of us agent. I am sure both of us have seen prices rise at the pump in New York and Texas. This is another reason for energy independence, but that is another story.
As for the next disaster, we will have to see when and how big it is. There is still plenty of capital in the market from new carriers, sidecar agreements, hedge funds, etc.
Underwriting continues to take rate even with these better results. They are saving up for the next disaster they have to pay for.
Agent,
Carriers are taking rate this year as they cannot rely on investment income alone to build profitability.
The rate increases started on the CGL side as companies were looking to shed unprofitable business, and it has continued to property after the series of catastrophes.
With a reliance on underwriting to make a profit, carriers are willing to sacrifice premium volume to have better results.
If I were to make a comparison, it is like being an oil rich nation (ex. Russia or Saudi Arabia). You eventually come to the point where it is simply not profitable for you to keep pumping oil and export it to other countries. Hence, you reduce the amount of oil you produce and raise your prices. Unfortunately, that affects both of us agent. I am sure both of us have seen prices rise at the pump in New York and Texas. This is another reason for energy independence, but that is another story.
As for the next disaster, we will have to see when and how big it is. There is still plenty of capital in the market from new carriers, sidecar agreements, hedge funds, etc.