A Market in Transition – Carriers Seeking Acceptable Underwriting Profits

Video Transcription

Hello, my name is George Bucur, managing director and co-head at MarshBerry specialty practice. Serving MGAs (managing general agent), MGUs (managing general underwriter), wholesale brokers and program managers, we’re here today fresh off the heels of MarshBerry’s 2023 Peak Performance Summit. Now, I’m guessing most of you are familiar with Peak, but for those that you aren’t, Peak is an intimate networking event where we bring together roughly 100 executives from across the insurance distribution sector and focus on those aspects of the industry impacting specialty distributors. Now, there are many trends, and we’re going to explore those trends throughout 2023 in each of these individual vlog recordings. But one of the trends we’re going to dig into today is the fact that specialty has grown materially over the last several years, now making up 18% of the overall P&C (property and casualty) marketplace. One of the factors influencing this growth, inevitably, is the firming rate environment that has kicked in in 2019, and by historical norms is very long in the tooth. Furthermore, MarshBerry sees this rate environment continuing for another at least 12 to 18 months. Why is that? The reason being underwriters are having trouble generating underwriting profits. Carriers just can’t get the returns they need. The financial returns from their investments have been paltry with the declining equity environment and low interest rates. On the underwriting side, you have situations with natural catastrophes, social inflation, nuclear verdicts increasing frequency and severity on claims. All these compounding the underwriting pressures for carriers to generate acceptable returns, which at the end of the day, financial returns on underwriting really is what this industry is about

As part of the analysis at Peak, we dug into the individual lines of business and how long we feel the runway is for a continued firming environment, and again, it’s about 12 to 18 months out which is good for you as the broker, because why? Well, you get a percentage of that continued rate environment, you get a percentage of that premium. If you have questions about how your specific lines of business where you focus may be impacted by rate changes over the course of the next 12 to 24 months, please reach out, we’d love to have a conversation. We have data scientists that dig into individual lines of business and can give you a regression analysis about what that may look like in the foreseeable future. Otherwise, if you have questions about what MarshBerry is seeing in the marketplace, we’re happy to address those as well. Thank you for joining us today, and until next time be well.