Wholesalers are currently seeing greater opportunities, but that is largely due to increased exposures from a recovering economy and standard carriers retreating from traditional excess and surplus lines risks rather than significant rate increases, says Burns & Wilcox CEO Alan Kaufman.

Kaufman did say B&W has seen rates increase a bit in certain lines, and he expects that to continue in 2014, but the continued retreat of standard carriers had more of an impact in 2013. “That's the reason why last year—2013—was an even greater opportunity for us. E&S wholesalers—many of them did better not because of rate, but because there was a little more business to write,” he says.

Property rates have increased a bit, says Kaufman, but not enough. He says rates surprisingly did not increase much in the New York area impacted by Superstorm Sandy, and states areas such as Houston remain more favorable from a carrier and broker perspective with respect to property rates. Kaufman attributes the limited rate movement in New York to competition for risks there as well as possibly a mindset that a loss event like Sandy was more of an anomaly than a new reality.

Kaufman also says casualty rates in general should be higher.

While the rate environment may be lackluster from the wholesaler's point of view, the recovering economy is creating opportunities. Kaufman says there is more construction going on now and that has helped B&W, which insures a lot of contractors. “I wouldn't say it's a booming economy, but there's definitely an uptick,” he says.

It's a better assessment than previous years. In March 2010, roughly nine months after the recession officially ended, Kaufman said he had seen no change for the better. About a year later, he characterized the economy as “still weak,” and in 2012 Kaufman expressed doubts about a robust recovery occurring in an election year.

Kaufman says Texas and areas in South, as well as the Midwest, are showing better signs of recovery than the Northeast and California.

He notes that an even stronger economy would likely lift rates, as some of the industry's excess capacity would be put to use insuring the greater number of risks.

Growth areas

Kaufman says insuring healthcare risks—coverages for hospitals and other facilities—has been a strong area of growth, as the aging U.S. population has increased demand. But he adds that have been “all over the place.”

Daniel J. Kaufman, corporate vice president, managing director at B&W's Chicago office, points out that healthcare is a difficult class of business to write, requiring the right expertise.

Alan Kaufman also mentioned cyber liability as a coverage that is seeing an increase in interest. Kaufman says it remains an underutilized coverage and adds that it reminds him of EPLI years ago, when buyers did not feel they needed it and the coverage required a lot of effort to sell. “But you can't give up,” he says, noting that he believes cyber liability insurance will become a major product going forward.

Kaufman also points opportunities in renewable energy risks, calling it a “good business” to write, although he notes there have been more opportunities in Canada than in the U.S. in this area.

Special Reports /

B&W's Kaufman: Wholesaler Opportunities Stem from More Exposures; Not Rate

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