Bottom line, nobody knows. These are all opinions based on previous market cycles, none of which were like this or moved by the factors moving this one. Loss costs have taken an unprecedented move higher. Driven by financial inflation and social inflation (mostly social inflation). This has harmed results more than previous cycles and has harmed many more than they even realize as of yet. That goes to move this to be a deeper hard market than ever before. However offsetting that is “stupid” capital. That is old players and new players with new money thinking these increases will offset all past sins. It won’t, but those who dive in with unsustainable deals will not realize this for years. So what nobody “knows” and what will impact the severity of this portion of the cycle than any other factor is how much stupid money is out there.
Bottom line, nobody knows. These are all opinions based on previous market cycles, none of which were like this or moved by the factors moving this one. Loss costs have taken an unprecedented move higher. Driven by financial inflation and social inflation (mostly social inflation). This has harmed results more than previous cycles and has harmed many more than they even realize as of yet. That goes to move this to be a deeper hard market than ever before. However offsetting that is “stupid” capital. That is old players and new players with new money thinking these increases will offset all past sins. It won’t, but those who dive in with unsustainable deals will not realize this for years. So what nobody “knows” and what will impact the severity of this portion of the cycle than any other factor is how much stupid money is out there.
Well said. A wise man once said “Some people have more dollars than cents.”