NEW YORK-- A poll of attendees at The Conference Group's 16th Annual Executive Conference for the Property-Casualty Industry has found that executives expect changes in the brokerage and regulatory models to have fundamental and long-lasting effects on the industry, including downward pressure on industry compensation, with pricing likely to increase.
The conference is sponsored in part by PricewaterhouseCoopers LLP, Standard & Poor's Rating Services, Sidley Austin Brown & Wood LLP, Cochran, Caronia & Co. and The Black Diamond Group, LLC.
Among the survey findings:
Agent/broker compensation will look different in 2005, with 86 percent of attendees expecting a move away from commissions with profitability and volume incentives. Forty-six percent of attendees predict broker/agent compensation in 2005 will be straight commission with expense reimbursement, and an additional 40 percent predicted straight commission with no volume-based component.
The survey found that the majority of attendees, 53 percent thought that given the new regulatory model emerging, federal regulation will receive a big push in the 2005 Congress.
Regulatory inquiries and public disclosure changes are expected to have an impact on market share among the top five brokers, with 42 percent of attendees predicting that intermediaries will lose market share influence.
The survey also identified a paradigm shift in the industry brokerage model, with 56 percent predicting that the new model for global customers will rely on a lower price, fewer profit margins for the underwriter and complete transparency with the client.
The survey revealed that early looks at January 1, 2005 reinsurance renewals are most likely to include more competitive D&O offerings, with overall renewal rates declining worldwide. Additionally, 74 percent of attendees estimated that between 10-30 percent of SEC registrants in the industry will have a "material weakness" in their
Sarbanes Oxley Section 404 internal control report this year, highlighting additional compliance burdens for the industry. A large majority of attendees, 70 percent think that in commercial lines, rates are falling; premium are rising, which has companies writing increased exposure.
Lastly, while 41 percent of attendees feel that a view into 2005 of the property and casualty industry will include "more of the same," an almost equal number, 38 percent felt that 2005 will have strong companies getting stronger.
PricewaterhouseCoopers provides industry focused assurance, tax and advisory services for public and private clients. More than 120,000 people in 139 countries connect their thinking, experience and solutions to build public trust and enhance value for clients and their stakeholders.
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