Underwriter’s Viewpoint (1)
There’s been a lot of talk lately about the market changing, and the folks that are trumpeting this news with great joy and fanfare point to the following events that have been occurring more frequently in recent months:
(1) Reinsurance treaties are seeing price increases;
(2) Standard lines markets are pulling out of certain lines of business (and in some cases entire States);
(3) E&S carriers are holding firm on renewal pricing whenever and wherever they can; and most importantly,
(4) Builders are building again.
You might be inclined to ask us what we’re seeing of these trends. The answer is a little, but not much. Reinsurance rates have indeed gone up, but in most cases, rates are still so artificially low that the incremental increases can be offset in other areas of the quoted premium. Standard markets are indeed pulling back on their underwriting appetite and from that we are definitely seeing more quote activity on risks that we haven’t been able to write over the past couple of years. E&S markets, while interested in holding firm on rates for renewals, are still more interested in writing the renewal business than they are at holding the rate and taking the chance of losing the business. At Statewide, we’re pricing renewals the way we always have, fairly and honestly, and with the best chance of allowing you to keep the business.
As for building, there are indeed pockets of activity here and there and hope springs eternal when it comes to the construction trade in the Southwest and the Rocky Mountain regions where we operate. Until such time, however, as the economy kicks into high gear again, we all believe that the building trades will continue to pop up in pockets and not in a widespread outpouring of new business.
So is the market really changing? Your guess is as good as ours and we’ll let you draw your own conclusions from experience in your business. Our conclusion? The market is in fact changing, but we don’t think you’ll ever be able to look back at this time period and pinpoint a date that the market turned. It will be slow and erratic and almost imperceptible, but it will come…and we’ll be here when it does.