While there is near-universal agreement that carriers are achieving rate increases for P&C business, analysts and company & brokerage executives are struggling to ascertain what the current, gradually hardening market will look like in the long term.
J. Patrick Gallagher, president and CEO of brokerage Arthur J. Gallagher, said during Keefe, Bruyette & Woods' Insurance Conference, held Sept. 5 in New York, that the current rate environment is unique relative to the prior three market cycles he's seen. Rates are beginning to firm, but the industry is not seeing the “spike recovery” in rates typical of a hard-market turn, he added.
In fact, Gallagher said he believes there will not be a classic hard market in this cycle—and that is a good thing. Typical hard markets, he explained, are marked by short-lived radical rate increases, a lack of coverage availability and a rush to surplus lines for some risks. Now, the industry is instead seeing moderate increases, continued coverage availability and an orderly shift of some risks to the surplus-lines market.
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