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Using sound underwriting fundamentals, and more specifically, identifying more surgical risk segmentation by applying analytics, is the way forward. (Photo: Shutterstock) Using sound underwriting fundamentals, and more specifically, identifying more surgical risk segmentation by applying analytics, is the way forward for insurers. (Photo: Shutterstock)

You could say that commercial insurance is at an inflection point. Catastrophic losses in 2017, and again in 2018, driven by natural disasters such as hurricanes on the East Coast and destructive wildfires on the West Coast have weighed heavily on industry profitability. The market remains well-capitalized, but commercial insurance pricing has been rising in response to these losses. In fact, commercial pricing rose by nearly 4% in the second quarter of 2019.

Reflexively, insurers have raised premiums in response to recent weather-related asset losses. However, the close time proximity of these extraordinary events is putting more pressure than ever before on long-term profitability. Furthermore, continuous pricing increases don’t seem sustainable.

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