I hate to rain on anyone’s parade, but the last soft market lasted through several years of combined ratios well over 100%. We may have passed the tipping point on profitability, but I don’t think we have hit the bottom of the pricing trough yet.
This should hopefully be the first of a number of wake up calls for the insurance industry. If the current trend continues, we may see a hardening of the market, but we will also see fewer carriers-we may lose choices in markets, this can’t be a good thing for agents or insureds. Will somebody please alert the carriers-it’s time to wake up from your slumber!
Soft markets persist until a point when industry surplus falls. It takes more than a slight underwriting loss to make that happen. Investments are going south which might hasten the end, but I still think we are well over a year away from a widespread hardening.
In my view the bottom is in 2011. Too much capital, ample reinsurance support, and marketshare-driven mgmts. It takes negative cash flow to get mgmt’s attention. Major catastrophes or asset writedowns could help shorten the cycle. Insolvencies will creep up in 2010 and for several yrs thereafter. Hold on – it’s going to get bloody.
Dick is right, this thing will get worse before it gets better. I’m wondering what market JDC is in, this isn’t anywhere near hard yet !! Obviously, JDC doesn’t have Indiana, West Bend, Cincy, or Selective in his backyard, because they’re still not underwriting and they are cheap, cheap, cheap. (at least where I’m trying to sell) As for choices, we have too many. They pretty much all do the same thing anyway, so why not get some of them off the board? I thought we’d have announcements of 2 or 3 sizable acquisitions by now, but now it won’t be until the 3rd quarter. And Heck, Liberty Mutual is driving this bus anyway, and they’ve got money to burn.
I underwrite in VA, NC and TN. Harleysville, Southern and Safeco are still trying to see who gets to bottom first. I don’t see any hardening of this market anytime soon, even with carrier flight from the coast line properties. Some significant event is going to have happen to trigger a reversal of this deflationary pricing environment. Right now, we have competitors who will come in and offer a couple grand in premium below the insured’s actual loss history from the prior year… Even if you underwrite by playing the law of averages, which in my opinion you might as well be playing roullette, how can you expect to make a profit in that kind of environment. We’re trying to stay competitive, but we’re also not going to sacrifice common sense for a higher retention ratio. I just hope we come to some sense of reality before we become the next mortgage bank crisis.
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I am not sure all of our indusrty will agree, but this is music to my ears that this market is starting to harden!!
Amen JDC!
I hate to rain on anyone’s parade, but the last soft market lasted through several years of combined ratios well over 100%. We may have passed the tipping point on profitability, but I don’t think we have hit the bottom of the pricing trough yet.
This should hopefully be the first of a number of wake up calls for the insurance industry. If the current trend continues, we may see a hardening of the market, but we will also see fewer carriers-we may lose choices in markets, this can’t be a good thing for agents or insureds. Will somebody please alert the carriers-it’s time to wake up from your slumber!
I agree with CAH.
Soft markets persist until a point when industry surplus falls. It takes more than a slight underwriting loss to make that happen. Investments are going south which might hasten the end, but I still think we are well over a year away from a widespread hardening.
In my view the bottom is in 2011. Too much capital, ample reinsurance support, and marketshare-driven mgmts. It takes negative cash flow to get mgmt’s attention. Major catastrophes or asset writedowns could help shorten the cycle. Insolvencies will creep up in 2010 and for several yrs thereafter. Hold on – it’s going to get bloody.
Dick is right, this thing will get worse before it gets better. I’m wondering what market JDC is in, this isn’t anywhere near hard yet !! Obviously, JDC doesn’t have Indiana, West Bend, Cincy, or Selective in his backyard, because they’re still not underwriting and they are cheap, cheap, cheap. (at least where I’m trying to sell) As for choices, we have too many. They pretty much all do the same thing anyway, so why not get some of them off the board? I thought we’d have announcements of 2 or 3 sizable acquisitions by now, but now it won’t be until the 3rd quarter. And Heck, Liberty Mutual is driving this bus anyway, and they’ve got money to burn.
One has to wonder if the stock market and the middle of the country with all the Spring storm activity will help move us into a hard market?
I underwrite in VA, NC and TN. Harleysville, Southern and Safeco are still trying to see who gets to bottom first. I don’t see any hardening of this market anytime soon, even with carrier flight from the coast line properties. Some significant event is going to have happen to trigger a reversal of this deflationary pricing environment. Right now, we have competitors who will come in and offer a couple grand in premium below the insured’s actual loss history from the prior year… Even if you underwrite by playing the law of averages, which in my opinion you might as well be playing roullette, how can you expect to make a profit in that kind of environment. We’re trying to stay competitive, but we’re also not going to sacrifice common sense for a higher retention ratio. I just hope we come to some sense of reality before we become the next mortgage bank crisis.