With Italy’s sovereign debt woes portending another global economic meltdown, I am reminded why economics is called the dismal science.
I’ll wager that insurers must get a similar sense of foreboding when reviewing the latest commercial lines’ pricing data, which is rather dismal. New numbers from the Council of Insurance Agents & Brokers’
While you can’t discount the macroeconomic impact on the numbers, bear in mind that soft markets are the ultimate result of a collective lack of underwriting discipline. CIAB President Ken Crerar puts it bluntly. “We didn’t see any strong resolve by insurers to hold the line on pricing last quarter,” he says “The fundamentals don’t add up, but competition still rules the day.”
This fundamental disconnect—aggressively pricing to retain business and market share but ultimately collecting premiums insufficient to cover claims that may occur—means that insurers are effectively eating their seed corn. So are insurers doomed to a Sisyphean cycle of self-destructive, zero-sum competition or is there a viable exit strategy?
Recently in Chicago at the
Part of this, Ryan contends, is identifying new risks while eschewing commoditized, cutthroat lines. This is strategy he has employed at his new firm, Ryan Specialty Group. “The specialties in our business are where the money is,” he said.
To price these risks, Ryan said he puts a premium on hiring creative people. “If you build your business around differentiating talent good things will happen.”
Indeed, considering the seemingly unshakable malaise surrounding industry pricing and the economy as a whole, a little introspection during these times may not be such a bad thing.
Bill Kenealy is a senior editor for Insurance Networking News.
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