Not All Expect Hurricanes to Bring 2018 P/C Insurance Hard Market

By | October 30, 2017

  • October 30, 2017 at 8:08 am
    PolarBeaRepeal says:
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    There was too much capital unused, which will be reduced by the Nat Cat losses. So, some market price firming will occur. But it isn’t likely to be significant. More interesting will be the potential downgrades of insurers / reinsurers not properly prepared for the Nat Cats.

    • October 30, 2017 at 11:15 am
      Jax Agent says:
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      I’m afraid that you are correct. I do think we’ll see selective market hardening for areas like Florida, the Gulf coast, and east coast areas to within about 50 miles of the coastline.
      Other than that, probably not much. Makes you wonder how many billions the insurance economy can withstand ?

    • October 30, 2017 at 2:22 pm
      Agent says:
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      Polar, I have been in this business a long time. Customers, whether they are Personal Lines or Commercial will be hit, some by a big increase when they renew in 2018.

      • October 31, 2017 at 7:59 am
        PolarBeaRepeal says:
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        I’m sure a few, select territories will be impacted significantly. But there was enough capital to temper the rate increases, and the regulators are going to be watching rate filings with scrutiny of the cat pure premiums. I suspect reinsurers will push for and get bigger rate increases than the primary carriers because of the lack of regulatory involvement.

        I wonder if any small Res will be downgraded? I haven’t read of any in trouble with regard to the 3 main Nat Cats impacts.

        • October 31, 2017 at 12:30 pm
          Agent says:
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          Polar, if Texas sneezes, surrounding states get a cold.

          • November 1, 2017 at 1:01 am
            okt0ber says:
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            I doubt this will have much effect in Texas at all. If anything it’s the hail losses that are going to cause rates to increase. The wind damage from Harvey was not very severe outside of TWIA coverage areas. Auto comp rate probably will need to increase in the Houston metro area. Harvey has honestly been an auto event plus government wind and flood program losses.

          • November 2, 2017 at 7:30 am
            PolarBeaRepeal says:
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            The more the ‘TWIA areas’ are impacted by Nat Cats, and primary rates are allowed to better reflect those risks, including but not limited to ‘wind’, the more likely there will begin and continue an exodus / egress of risks from the coastal areas. In time, perhaps a half century, the risks remaining in high risk shoreline areas will largely be self-insuring, with high XS cat covers being their only protection.

            The regulators’ tempering of rate increases in non-TWIA coverage will signal how serious they (state insurance departments) are in trying to persuade risks to mitigate, rather than subsidize, the risks & costs.

        • November 10, 2017 at 4:57 pm
          Agent says:
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          Polar, not all expect the Hurricanes to not bring on a harder market. Rate increases will be flying in 2018, trust me.

  • October 30, 2017 at 2:31 pm
    mrbob says:
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    I must say that it is about time for pricing to get back to a actuarially sound level. Looked at a cabinet shop the other day in FL that was currently priced for special RC at .14 per hundred. That pricing level does not even come close to the fire load for the risk.

    Cruel though it may sound not enough of the events that did occur in the gulf were wind losses, but rather flood. As long as investors see this as a good play pricing will follow along it’s long death spiral.

    If anything I feel that the California wildfires will have a larger impact on pricing for urban interface risk rather than wind in the gulf.

    Just my thoughts.

    • October 30, 2017 at 3:31 pm
      Agent says:
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      mrbob, good thing the economy is bouncing back at a good clip so people will be able to pay more for their insurance.

      • November 1, 2017 at 8:39 am
        Ron says:
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        I agree. So, why do we need to lower taxes, especially for the top 20% and plunge ourselves deeper in debt?

        Let’s reduce personal taxes on the bottom 80% only, you know, the ones who actually spend the additional money, drive demand, and generate economic growth; offer tax credits to businesses that grow, hire and increase wages; eliminate subsidies to profitable companies; and reduce spending across the board, including the military, by 5%.

      • November 1, 2017 at 5:04 pm
        Captain Planet says:
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        Yes, it does continue to get stronger. Thank you, President Obama! The momentum your Presidency created continues to build.

        • November 2, 2017 at 5:52 pm
          The Night of the Living ACA Death Spiral says:
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          Deloooooooooooooosional.

          • November 7, 2017 at 12:01 pm
            Agent says:
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            Yes, Planetoid is totally delusional. His President said he went 8 years scandal free. Oops, more and more keeps coming out and the scandals are too many to count.

        • November 2, 2017 at 5:56 pm
          The Night of the Living ACA Death Spiral says:
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          Why did BO blame GWB for the problems he allegedly inherited and NEVER solved? If he ran for POTUS, shouldn’t we assume he is implying he is CAPABLE of, and INTENDS to, solve those problems? He had EIGHT YEARS TO JUMP-START the US Economy and he failed to deliver a FULL EMPLOYMENT ECONOMY and OVER 3% GDP growth other than 1 QTR.

          Your statement is fiction at best, and nearly certainly an outright lie.

          • November 6, 2017 at 10:46 am
            Agent says:
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            Let’s see, we had a Stimulus that wasn’t a stimulus, created few jobs and was mainly a pay back to supporters. Then, nothing to actually stimulate the economy like tax breaks and series of recovery summers that didn’t help at all. GDP languished for all 8 years under Progressive leadership. Now, we have an aggressive growth program under our POTUS and with a tax overhaul, we will see a booming economy for a change. Sure glad we elected a businessman instead of a crooked Democratic politician.

  • October 30, 2017 at 6:55 pm
    Retired Agent says:
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    Still just too much capital in the market. We pay flood claims and rebuild in the same flood plain and wait for the next flood. I can remember when a major property and casualty in the 80’s said that they would no longer underprice their coverage. They lost about 25% of their business before they reversed their decision

  • October 31, 2017 at 12:14 pm
    Doug Fisher says:
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    I know they aren’t necessarily 100% related, but most states I have seen have filed decreases in workers comp loss costs, which has caused some carriers to revise their loss cost multipliers upwards. In some cases, 15-20% increases to offset the lowered rates.

    • October 31, 2017 at 12:33 pm
      Agent says:
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      Hey Doug, the problem isn’t in WC, but it is in Personal Auto, Commercial Auto and Property Insurance.

      • October 31, 2017 at 12:52 pm
        Doug Fisher says:
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        A hard market will eventually trickle down to all lines, however, as package carriers try their damnedest to recoup losses by any means necessary.

      • November 3, 2017 at 10:31 am
        Captain Planet says:
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        Agent,
        I do disagree to a degree on your WC comment. I think it depends on the class of business. The ag sector is certainly having WC issues. Especially in WI where you cannot impact rate. Further, commercial auto losses bleed into WC losses when the driver is injured. We definitely see WC as a black eye on our TCR.

        • November 7, 2017 at 12:06 pm
          Agent says:
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          Planetoid, do try to see the big picture in WC instead of cherry picking. By the way, any state that reformed their WC law like Texas did years ago into one that did what it was supposed to do has had very few problems. Texas Mutual continues to pay record dividends every year and they dominate the market in Texas.

  • October 31, 2017 at 12:54 pm
    Captain Planet says:
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    The market isn’t as soft as it was just a year ago, but in no way is it turning into a hard market. Way too much capital out there. I don’t know if we will ever see a market like the early 2000’s when I was seeing rate increases of 20%+ across the board. There are certain lines I can see targeted as well as classes of business. I have heard many of our competitors thinking they are going to get about 5% in rate in 2018. Hardly a hard market when talking single digits. We all know this will probably generate half of that “rate need”. No one wants to adversely select against themselves.

    • November 1, 2017 at 6:55 am
      CL PM says:
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      The early 2000s were certainly different. I managed KY Home for a company back then. We raised our rates over 70% in a three year period and our renewal retention actually IMPROVED over that period. Don’t know that I’ll ever see that happen again.



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