require it and the economics require it.”
But that optimism may be misplaced.
While carriers “would like to see a little bit
of a breeze, I haven’t seen it in exposures,
Indeed, in andersen’s
view, carriers are not hope-
ful but actually “very
depressed” and fearful that
the same factors keeping
prices where they are now
will continue for the next
12 to 18 months.
David eslick, chairman
and Ceo of Marsh & McLen-nan agency, concedes that
carriers are definitely suffering. Losses are straining reserves, and loss in
investment income is adding to the misery.
Ultimately, the only place to make money is
underwriting.
But unless they exhibit “stiffer backbone”
and stop competing so ruthlessly with each
other for new business, they will not begin
to get the rate they need, eslick adds.
some turn on price” in 2012 on a line-by-line basis, asserts H. Wade reece, chairman
and Ceo of BB&t Insurance Services.
Willis’ Swift adds there are already
BB&t owns the wholesale-brokerage firm
CrC Insurance Services.
and on another positive note, reece
adds that the excess and surplus lines
market is seeing some
rate increases, and busi-
ness that had moved to
the retail market is return-
ing—as admitted carriers
show more underwriting
discipline.
“It’s a good sign for the
industry,” says reece.
INDICATORS OF MARKET TURN
While no one is sure just how high—or how comprehensively—prices will increase, lots
of evidence is mounting that, in the words of Ken A. Crerar, president of the Council
of Insurance Agents & Brokers, rates “appear to be edging toward positive territory.”
1Q 2011
Average Rate Shift -2.9%
2Q 2011
Average Rate Shift -0.1%
3Q 2011
Average Rate Shift +0.9%
Ended 2010
March 2011
June 2011
July 2011
Sept. & Oct. 2011
Council of Insurance Agents & Brokers’
broker survey of P&C market pricing:
MarketScout’s monthly barometer
report on market rates:
-5%
-4%
-3%
-2%
0%
LINE-BY-LINE
While an overall hardening of the market
may not be guaranteed, a consensus exists
that individual lines will turn.
“there is clear belief that there will be
patches of rate firming in certain lines, such
as property and workers’ compensation.
SOME POSITIVE SIGNS FOR 2012
one positive sign for insurers is an improving wholesale market, says reece, whose
Carriers Say They’re Pushing Rate
■ STIFFENING THEIR SPINES?
mission—to take care of our customers; but we
must also take care of ourselves,” Krump said.
Travelers Chairman/CEO Jay Fishman
recently told fnancial analysts the company
has stepped up efforts to
raise rates, and its competitive advantage will help make
those increases stick.
“We are seeking improved
pricing as well as terms and
conditions on the insur-
ance products we sell,” said
Fishman. “We are doing so not
only because interest rates
may remain low for some time,
but also given the possibility that the more
active weather patterns, such as we have expe-
rienced over the past few years, may continue.”
William R. Berkley was more succinct in
his evaluation of the markets: “The visibility
of a cycle change is even more evident. We
believe that price increases and premium-
volume growth will continue.”
Speaking to financial analysts, Ace Ltd.
CEO Evan Greenberg said the insurer is seeing
“positive” rate increases, but it
remains to be seen whether the
trend will continue. “Pricing over-
all continues to firm,” he noted,
as “more classes achieve posi-
tive rate while rate decreases
[are] smaller.”
“We are cautiously optimistic
about market trends,” Costas
Miranthis, president and CEO of
PartnerRe, said in a statement.
“We are beginning to see price increases in
many lines, particularly short-tail lines, as well as
increased demand for reinsurance.” NU
BY MARK E. RUQUET
AFTER BEARING the effects of a slug- gish economy and substantial weather- related losses in 2011, carriers are well
aware that they need to increase rates in order
to balance their books.
Yet the question then becomes, can they
raise rates substantially enough to cover their
losses and offset low investment yields?
Photo by iStockphoto
In a speech at the Council of Insurance
Agents & Brokers meeting in October in
Colorado Springs, Colo., Paul Krump, president
of commercial specialty lines for Chubb Group
of Insurance Cos., said the current reality for
carriers is a “corrosive” situation that needs to
be addressed as underwriters seek to balance
business with policyholders’ concerns.
PropertyCasualty360.com
November 21/28, 2011 | National Underwriter Property & Casualty | 17
