I agree the new tax plan will help all businesses, but I’m concerned about lack of underwriting profit. I feel like admitted carriers are driving down pricing by getting involved in many types of accounts that are traditionally excess/surplus.
Insurance has been and still is a cyclical business. I have been through a ton of hard and soft markets. They don’t seem to learn and they jump in and jump out no matter what the economy looks like.
DNCs Coll(F)usion GPShip Strzok an IceberGowdy says:
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If actuaries, claim pros, loss control pros, and underwriters tackle claim costs, insurance affordability will improve, most likely shrinking the E&S segment. The lack of underwriting profit will be affected favorably by interest rates, which are likely to move up with anticipated (and observed!) greater GDP. Lower claim (loss) costs will yield room for more profit in standard rates, albeit only temporarily until rate setting processes reflects it. Hopefully, all of that translates to the shrinking E&S market, too!
“They don’t seem to learn and they jump in and jump out no matter what the economy looks like.” Agents don’t contribute in anyway to the market gyrations, right? Moving business for lower premiums on a regular basis.
DNCs Coll(F)usion GPShip Strzok an IceberGowdy says:
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Agents DO move business for lower premiums. But who actually drives that but consumers looking for the biggest market basket of goods for their set fixed income/ assets? Market gyrations are largely a result of the uncertainties and volatility in the rate setting process. With claim costs becoming more predictable with the newer projection methods used by actuaries, and more current data due to improved IT capability, the rate setting process is more accurate and current, and has less wild swings.
Move it or lose it Balance. By the way, Insurance Modelers thought they had the Personal Auto business modeled right and it is the leader in losses among the major carriers. Something wrong with the Algorithms.
The new tax law should benefit all carriers and help their bottom line even after paying bonuses, contributions to 401K’s.
I agree the new tax plan will help all businesses, but I’m concerned about lack of underwriting profit. I feel like admitted carriers are driving down pricing by getting involved in many types of accounts that are traditionally excess/surplus.
Insurance has been and still is a cyclical business. I have been through a ton of hard and soft markets. They don’t seem to learn and they jump in and jump out no matter what the economy looks like.
If actuaries, claim pros, loss control pros, and underwriters tackle claim costs, insurance affordability will improve, most likely shrinking the E&S segment. The lack of underwriting profit will be affected favorably by interest rates, which are likely to move up with anticipated (and observed!) greater GDP. Lower claim (loss) costs will yield room for more profit in standard rates, albeit only temporarily until rate setting processes reflects it. Hopefully, all of that translates to the shrinking E&S market, too!
“They don’t seem to learn and they jump in and jump out no matter what the economy looks like.” Agents don’t contribute in anyway to the market gyrations, right? Moving business for lower premiums on a regular basis.
Agents DO move business for lower premiums. But who actually drives that but consumers looking for the biggest market basket of goods for their set fixed income/ assets? Market gyrations are largely a result of the uncertainties and volatility in the rate setting process. With claim costs becoming more predictable with the newer projection methods used by actuaries, and more current data due to improved IT capability, the rate setting process is more accurate and current, and has less wild swings.
Move it or lose it Balance. By the way, Insurance Modelers thought they had the Personal Auto business modeled right and it is the leader in losses among the major carriers. Something wrong with the Algorithms.
The fact that the underwriting cycle is not nearly as volatile as it has been historically is proof that predictive models work.
So if State Farm loses billions on Personal Auto, that is proof that their Algorithms were correct? Not so much.