NU Online News Service, Oct. 18, 3:03 p.m. EDT
Insurance pricing remains extremely volatile, affecting the growth of insurance agencies and brokerage firms, says the chief executive of Brown & Brown, and lending to the continued struggle at the firm to grow organically.
Discussing the Daytona Beach, Fla.-based insurance firm’s third-quarter financial results today with financial analysts, J. Powell Brown, president and chief executive officer calls the current insurance market “inconsistent” with carriers asking for more information on renewals and paying greater attention to underwriting risks. Some carriers are willing to walk away from business, he says.
However, despite this attention to underwriting, Brown says competition remains so intense that significant reductions still take place on accounts for new business.
He says the insurance markets remain overcapitalized, leading to continued intense competition for new business. Regional carriers remain “aggressive” on prices, says Brown. Where insurers are trying to get increases is on renewal business, he adds.
In some cases, he says, competing producers are walking into Brown & Brown’s clients’ offices making offers that “don’t make sense” just to get their foot in the door. Clients are coming back to Brown & Brown for help to correct the problems created by competitors when they write the business, Brown says.
“Sometimes we can help,” says Brown, but primarily the firm works to get the customer back in the future.
Concerning catastrophe-rate increases, he says some carriers are finding it to be a “big challenge” to implement the new RMS 11 catastrophe model, while others are not being affected as extensively as they originally feared.
He says catastrophe treaties may not increase as much as feared, with single-digit increases instead of double digit.