A survey of insurance carriers conducted by FirstBest Systems,Inc., indicates the maket is beginning to harden as insurers arenow in a position to be more selective about the risks theyunderwrite, so that they can increase premiums, grow theirbusiness and turn a greater profit. FirstBest announces thefindings from an industry survey of insurance carriers primarilyfocused on commercial lines.

Insurance industry research on the subject in recent months issplit. In September, MarketScout reported  that commercial lines rates wereup five percent and personal rates increased threepercent. Yet, a panel of insurance executives stated at the October 2012 Council of Insurance Agents andBrokers (CIAB) Insurance Leadership Forum in Colorado that theindustry is not experiencing a hard market just yet. The groupbelieves that while p&c rates are higher on average and therehave been fewer catastrophes, there are areas where rates areincreasing dramatically and others where rate increases arenegligible.

To reveal the market reality, FirstBest surveyed insurers overthe last few months to learn how they felt about the businessclimate. FirstBest received 72 survey responses from professionalswith IT and business management responsibilities. Eighty-five percent of the group indicated that they work withcommercial lines of insurance, with remaining respondents servingpersonal lines.

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

FirstBest also asked: "As your company positions for the hardmarket, which goals top the list below?" Respondents were asked toselect up to three responses. The goals most indicated among thesix options were:

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

When asked: "How strategic is underwriting in achieving growthand 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 thegreatest challenge for underwriters?" 33 percent of carriersindicated they are most challenged to "analyze risk in less time toget quotes out quickly," 24 percent indicated "access to data andanalytics in order to make smarter decisions," and 18 percentindicated "adjust risk appetite on the fly." The remainingresponses each garnered about eight percent.

"While we did not include agent and broker responses in thesurvey findings, given the response rate was statistically smaller,the sentiment this group provided was in line with theircounterparts at commercial-lines carriers—that they wereexperiencing a hardening market even before Hurricane Sandy," saysJoseph Pilkerton, co-founder and COO, FirstBest Systems.

"The carriers we're working and speaking with understand that ahard market offers greater opportunities to select new businessamid higher volumes of submissions and to carefully scrutinizetheir renewals," adds Pilkerton.