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What brokers need to know about the property-catastrophe market in 2015
After a year characterized by low catastrophe losses and soft market conditions, insurance agents and brokers can expect a continuation of competitive property-catastrophe pricing. This trend, combined with new, emerging risks and the ever-present risk of storms, earthquakes, and terrorism, will characterize the market in 2015. Even in this soft market, insurers are reserving the more competitive prices for new accounts and attempting to hold the line on renewals. This may tempt brokers to re-market programs. But figuring out when to re-market can be challenging; expertise matters here. Brokers must be able to read the market to know when to re-market or restructure, since that approach may not generate enough of the sought-after cost savings. Account loss experience and previous rate history certainly play a factor. It also may damage long-term relationships with insurers for short term gain. Relationships can be particularly important with the catastrophe-exposed account. The best strategy for securing rate reductions is attention to detail. To understand and price risks, underwriters rely on catastrophe models. These models, in turn, rely on detailed engineering and construction data to provide a detailed portrait of a risk. By providing detailed information about a risk, brokers can strengthen their relationship with underwriters and improve their bargaining positions. The insurance industry always has its gaze fixed on the horizon, and we are watching a few risks for the year ahead, including the ebola virus, terror and a more active Atlantic hurricane season. At the time of writing, the Terrorism Risk Insurance Act renewal is in Congressional limbo. At this point, brokers have likely addressed this issue with their clients. But in light of the growing threat posed by groups such as ISIS and Boko Haram, brokers may want to consider standalone terror coverage, especially for clients that truly need such coverage due to lender or investor requirements or locale. For more on what to expect in 2015, download our State of the Market: Property Catastrophe Insights Report. You can also read my interview with Insurance Business America, where I discuss the above topics, plus the insurance industry’s response to the ebola virus’s spread. Have questions? Suggested additions? Chat with us on Twitter (@napcollc).
Samantha Kimball
Other articles by: Samantha Kimball
Categories: state of the market, agents/brokers, terrorism
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