After a recent trip to London & spending time with various Lloyd’s markets, I thought it was time to put pen to paper & provide a personal view on the current market conditions.
There are still many brokers seeking rate reductions on renewals or asking for heavy discounting on known rates when attacking new business. The reality is, we are now in a hard market & capacity rather than pricing is becoming more of the driving factor. Yes sure, there are still Underwriters putting out very competitive capacity, but those examples are few & far between.
We are still seeing an incredible amount of very “average” quote submissions or slips, with basic information such as building construction or protections missing from ISR slips as an example. We do of course also see some excellent & very thorough submissions, these brokers are going to get a much better result & Underwriters will put out their capacity to these risks before considering the “average” submissions.
What is also becoming more apparent, is that Underwriters are getting fed up of a “scatter gun” approach to marketing risks. Potential Insured’s are engaging multiple brokers or brokers are engaging multiple underwriting agencies to cover all bases, thinking that they will get a better result. The issue from this approach is that most roads generally tend to lead into the same Lloyd’s markets (typical of a hard market). So, the potential Underwriter is seeing the same risk from multiple producers, sometimes with different information to make matters worse.
We have seen examples where Underwriters have withdrawn from quoting all together due to this approach, as they feel they are just getting used or price checked. The particular classes in my opinion where this is happening more so than others, are hard-to-place property risks and D&O risks. The other point I want to make & I might be shooting myself in the foot by saying this, is that I feel that brokers need to work closer with preferred partners, gain their trust & communicate more in general in order to meet their expectations. This might mean Lion Underwriting misses out on new opportunities, but at the same time it might also mean we get to work closer with our supporting brokers to achieve more favourable outcomes, at the same time we keep our Underwriters on side by avoiding the “scatter gun” approach. Capacity is available (within reason), but how brokers are accessing that capacity definitely needs to be thought out & discussed before hitting the email send button!
In my opinion, the hard market is here to stay for a while. As the year progresses, we are likely to see the market get even tougher due to the restrictions on written premium limitations within the Lloyd’s of London markets.
The team at Lion are always willing to have a chat about a particular risk before you start your marketing process.