Survey Finds Insurance Carriers Looking Toward Hard Market

A survey of insurance carriers conducted by FirstBest Systems, Inc., indicates the maket is beginning to harden as insurers are now in a position to be more selective about the risks they underwrite, so that they can increase premiums, grow their business and turn a greater profit. FirstBest announces the findings from an industry survey of insurance carriers primarily focused on commercial lines.

Insurance industry research on the subject in recent months is split. In September, MarketScout reported  that commercial lines rates were up five percent and personal rates increased three percent. Yet, a panel of insurance executives stated at the October 2012 Council of Insurance Agents and Brokers (CIAB) Insurance Leadership Forum in Colorado that the industry is not experiencing a hard market just yet. The group believes that while p&c rates are higher on average and there have been fewer catastrophes, there are areas where rates are increasing dramatically and others where rate increases are negligible.

To reveal the market reality, FirstBest surveyed insurers over the last few months to learn how they felt about the business climate. FirstBest received 72 survey responses from professionals with IT and business management responsibilities.  Eighty-five percent of the group indicated that they work with commercial lines of insurance, with remaining respondents serving personal lines.

In the survey, when asked “At what stage do you find the market?” 71 percent of respondents felt the market was beginning to harden; 18 percent felt the market was already hard; and only 11 percent felt the market was still soft.

FirstBest also asked: “As your company positions for the hard market, which goals top the list below?” Respondents were asked to select up to three responses. The goals most indicated among the six options were:

  • To ensure high renewal rate of quality business (64 percent)
  • To provide faster service and decision making (40 percent)
  • To obtain as many qualified submissions as possible (33 percent)

When asked: “How strategic is underwriting in achieving growth and profitability in a hard market?” 92 percent of carriers chose “very important," with the remaining eight percent selecting “somewhat important.” 

When asked: “As you optimize for the hard market, what is the greatest challenge for underwriters?” 33 percent of carriers indicated they are most challenged to “analyze risk in less time to get quotes out quickly,” 24 percent indicated “access to data and analytics in order to make smarter decisions,” and 18 percent indicated “adjust risk appetite on the fly.” The remaining responses each garnered about eight percent.

“While we did not include agent and broker responses in the survey findings, given the response rate was statistically smaller, the sentiment this group provided was in line with their counterparts at commercial-lines carriers—that they were experiencing a hardening market even before Hurricane Sandy,” says Joseph Pilkerton, co-founder and COO, FirstBest Systems.

“The carriers we’re working and speaking with understand that a hard market offers greater opportunities to select new business amid higher volumes of submissions and to carefully scrutinize their renewals,” adds Pilkerton.

 

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