Author Topic: Insurance Hard Market “it is happening”  (Read 2187 times)

tooskinneejs

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Re: Insurance Hard Market “it is happening”
« Reply #10 on: February 06, 2020, 06:43:01 AM »

I mean, I guess I'm just skeptical. Interest have been excessively low for years. Capital has flooded into the industry and driven down pricing for years. Insurers have made subpar ROE for years and didn't raise pricing.

Neither of those have changed, but I'm expected to believe that industry players who priced insurance too low to make a decent ROE for the past several years have suddenly all had a come to Jesus at the same time and raised pricing? Why wouldn't they have done this in 2016/2017 instead of waiting until 2020 of this was truly the case?

I'd be very excited for Fairfax if this was, in fact, the case. But having a hard time believing we're in a sustainable pricing environment because I can't explain why they weren't doing this years ago when the industry dynamic doesn't appear to have changed much.

I thought most hard markets occurred when capital fled the industry. It seems odd to expect that it just happening now simply because company's collectively raised premiums.

Sounds similar to what happened in the airline industry in recent years.  They all stopped competing so hard on price and rationalized their fleets.  Now the real question is how long will it last?


mcliu

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Re: Insurance Hard Market “it is happening”
« Reply #11 on: February 06, 2020, 08:06:42 AM »
Maybe, in the past few years, insurers were hoping for higher interest rates as the economy recovers, but have now realized rates will stay lower for longer..

I think part of airline rationalization is a result of consolidation, whereas insurance is still very fragmented.

KFS

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Re: Insurance Hard Market “it is happening”
« Reply #12 on: February 06, 2020, 09:47:33 AM »
Some comments from Markel's Richie Whitt:

"As for market conditions, the themes that mentioning throughout the year continued in the fourth quarter and during the important January 1 renewals. Market conditions continue to improve in an incremental fashion. We continue to see month over month pricing improvement in almost all lines. It's clear that the market continues to transition with carriers reassessing their expectations for CAT frequency and severity and professional and casualty claims trends creating uncertainty. January one renewals continued the trend of gradual price improvement. As has been noted by others, there were some disappointment around property reinsurance rate increases at this renewal. Our sense is that the Japanese renewals at April 1 and the Florida renewals at June 1 will tell us much more about the health of price momentum in the reinsurance market. We are optimistic that this incremental rating environment improvement will continue during 2020.

..... The reunderwriting that's been taking place at a number of organizations over the last 12 to 24 months is clearly driving business into the E&S markets you've probably seen the reports about the activity in the stamping offices being up large numbers 20%-plus in some cases. So, there is no doubt there is a realignment readjustment going on in the market. I'm still not going to call it a hard market. But it's certainly a much more favorable market than we've seen in a long time. And yeah, as you would expect submission activity is up significantly. We are obviously growing very nicely. So, it's an exciting time. I have to say it's a lot of hard work for our underwriters right now because they are inundated. But I would say they're all very excited about it because history has proven you don't get these opportunities, but so often and when they happen, you need to. You need to take advantage of them, and I will say, I think we did a nice job. Our folks did a nice job of staying disciplined as the markets were going down such that we are in great position to take advantage of this market today. I feel really good about our opportunity."