The Insurance Groundhog popped out of his hole on schedule this morning, but to the disappointment of carriers as well as their agents and brokers, but to the joy of risk managers, our furry friend did not see any substantially hardening market by spring–or perhaps even by fall, for that matter!
As I indicated, whether this is good news or bad depends on your point of view.
Carriers desperate for top-line growth at a time when their investment income is tanking were hopeful the Insurance Groundhog would see double-digit rate hikes in the immediate future. I'm sure their agents and brokers–while honor-bound to get the best coverage at the lowest price for their clients–wouldn't mind seeing premiums rise to boost their commission income during these trying times.
Risk managers, however, couldn't be happier. At a time when just about every company is facing revenue declines and are under severe pressure to cut costs, the last thing a risk manager wants to tell their CFO or board is that insurance prices are going up big time!
Price cuts will certainly stabilize in the first half, if for no other reason than the sharp hike in reinsurance costs for many primary carriers, and their eagerness to lower their retentions. But it will remain difficult to pass along such cost increases to buyers, especially with plenty of surplus still sloushing around the market, keeping rates competitive.
All bets are off should another major catastrophe strike, but absent that, the groundhog doesn't expect any stiff hardening of the market, and I can't argue with him. Can you?
In case you're wondering, the Insurance Groundhog also didn't see federal regulation getting passed this year. Nor did he see expansion of the National Flood Insurance Program into wind coverage.
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