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The State of the Insurance Market
Hollywood meets Hartford - 2005
We interrupt this usually mind-numbingly boring dissertation of facts and figures (if you read our competitors’ industry updates) to bring you this Special Programming Event. In keeping with the spate of trivial award shows permeating the airwaves during this time of year, we proudly present the most recent entry… The Spitzer Awards
Best Documentary
And the winner is: RIMS Benchmark Survey for 2004
RIMS and Advisen, sponsors of the 2004 Benchmark survey, once again, nailed the analysis of 2004. “The year of declining prices was the longest soft market since the 1990’s, but overall economic conditions should ensure that insurance capacity remains at levels that discourage a pricing freefall.” The final quarter of 2004 represented the fourth consecutive quarter of declining prices. All major lines of coverage experienced pricing declines during the period.
Best New Crime Drama
And the winner is: Marsh
Our industry received a black eye in 2004 and rightfully so. The activities that were uncovered were despicable. What is important to note is that the overwhelming majority of the professionals in our industry are honest and act with integrity. Certain firms put corporate profits before client service. We believe corporate profits are a result of client service. You will always get full disclosure and complete transparency from Equity Risk Partners. For a list of the leading contenders for next year’s award look up the Business Insurance List of Top 10 Brokers.
Best Comedy
And the winner is: Directors’ and Officers’ Liability
The D&O market is a joke – and deserving of this prestigious award that in previous years has gone to Medical Malpractice, Environmental Liability, and General Liability. We continue to see 10% - 20% decreases in D&O premium resulting from new capacity in the market, as well as an expansion of the existing market capacity. This expansion is interesting when viewed in light of worsening loss trends, tightening reinsurance, and Sarbanes-Oxley. As we have discussed previously, the D&O submission process is critical to obtaining the best terms and conditions. You should not expect D&O to be a repeat winner in 2006.
Best Direction
And the winner is: Property Insurance
Coaxing a compelling performance out of an actor and molding the needs of the scene to the skills of the actor is the sign of a great director. The property insurance market achieved great direction in 2004 as it molded the needs of the underwriters to the skills of the insureds. Good risks (Robert DeNiro) enjoyed 10% - 15% rate decreases. Average risks (Richard Gere) achieved flat renewals. Risks presented with poor information or bad loss experience (Pauly Shore) actually saw rate increases of 5% - 10%. Interestingly, despite going over budget by $12.0 billion on its Florida Hurricane epic, the property insurance market as a whole saw no significant damage at its box office. The industry buzz over the non-renewal of TRIA (Terrorism Risk Insurance Act) may prove to be more hype than a serious contender.
Best Producer
And the winner is: Workers’ Compensation
A producer has to conceive of a project, finance the vision, and implement the vision against significant odds. Like a successful producer, workers’ compensation conceived of a business free from regulatory hurdles, burdensome rate structures, oppressive benefit schedules, and rampant fraud. Private equity and other investors gladly financed new forays into the workers’ compensation marketplace. Like a new twist on an old classic, the insurers without legacy liabilities have made a real impact on the competitiveness of the market. The overall “production” is still a work in progress. But, the early previews look like it will be a blockbuster. California and Texas both enacted significant reforms which have served to attract new capacity to those states. Unlike movie accounting, supply and demand does work in the insurance industry. If the reforms hold, the supply of workers’ compensation options should continue to increase. It’s too early to tell for sure, but we may just see a sequel in 2006.
Best Comeback
And “The Spitzy” goes to: Liability Insurance
Liability rates appear to be approaching pre-9/11 levels. While not yet reaching rate levels seen in 2000, liability renewals continue to show flat to modest reductions. Clearly this market is softening. 5% - 10% reductions were common in 2004 and will likely continue in 2005. As you know, liability is a very broad and diverse line of coverage, encompassing basic, as well as unique exposures. Specialty liability coverages, such as environmental, aviation and products, continue to have less pricing and terms flexibility than their more standard counterparts, like auto liability. If the trend continues, we may see Liability Insurance as an early contender for Best Comedy in 2006.
Best Set Design
And the winner is: Equity Risk Partners
Creating a believable world for the characters to inhabit and a world that the viewer finds aesthetically pleasing and representative of reality is the key to any blockbuster. Equity Risk Partners presents our clients’ risks to underwriters in a fashion that honestly reflects the exposure while demonstrating our deep understanding of our clients’ operations. This allows the underwriters to understand and appreciate the finer points of the risk. This process usually culminates in an award winning result.
Best Screenplay
And the winner is: Equity Risk Partners
The State of the Market, The Partners Perspective, White Papers, Guest Commentaries – we pride ourselves on constantly communicating and educating our clients. All of our communication focuses on one thing – how does a particular topic impact private equity firms and their portfolio companies? If there is an issue or topic you would like to see us address, please let us know. We are always on the lookout for news and views that resonate with our clients.
Best Collaboration
And the winner is: The 200+ Clients and Partners of Equity Risk Partners
We are privileged to work for you and we are honored to work with you. We appreciate your continued support and consideration.
Michael C. Marcon |
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© 2004 Equity Risk Partners . All rights reserved. License #0D21146 |
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