Brokers who have found themselves struggling to place once-vanilla risks may be comforted to know they’re not alone, after an expert in the field agreed conditions are definitely getting tougher.
“The phrase ‘hard-to-place’ is becoming more and more widely used and is now including risks which, 18 months ago, would have seemed vanilla, and would have been swallowed up by all the local insurers,” said Ingrid Anderson, executive director of Steadfast Placement Solutions (SPS).
As the internal wholesale arm of Steadfast, the SPS team focuses solely on finding capacity for hard to place SME and middle-market commercial risks – a service which Anderson says is in high demand.
“Last year, we saw over 2,500 quote request submissions from the network,” she told attendees gathered at the recent NIBA Convention. “These inquiries were made up of multiple classes, including property, liability, professional lines and marine – it really is multi-class business that we deal with.”
While it may be frustrating for brokers to fight for capacity in areas that were previously trouble-free, Anderson says the reason for the shift is both understandable and straightforward.
“Losses are one of the main reasons why a risk becomes hard to place,” she said. “Multiple losses from a particular industry segment, or occupancy over a sustained period of time, will eventually lead to higher rates and insurers will sometimes withdraw completely from that particular segment as it’s deemed unprofitable.”
As an example, Anderson pointed to the last six months of 2018, when there were over 15 fire losses related to recycling businesses.
“We now have virtually no local markets, if any, that will write SME recycling risks,” she said, adding that the sector is among the hardest to find capacity for.
However, while there are certainly challenges, Anderson insisted it’s not all doom and gloom.
“The SPS team provided bindable quotes on 80% of the business we received, which I think really goes to show that there are insurance markets out there which are still writing hard to place business,” she said.
Anderson’s suggestions included becoming more familiar with the niche appetites of local underwriting agencies, leveraging multiple Lloyd’s syndicates, and approaching international insurance markets – including that of London, Asia, and the Middle East.
“While we are experiencing a hardening market, and hard to place risks seem to encompass a wider variety of risks than ever before, with time, preparation and good risk submissions, brokers should still be able to find capacity,” she said.
