Property insurance policyholders, especially those in catastrophe-prone regions, have been grappling with the impact of escalating premiums and a carrier capacity crunch.
However, as 2024 progresses, at least one expert told Insurance Business that the market is approaching a pivotal juncture, transitioning from the stringent environment in recent years.
Ben Beazley (pictured), EVP of national accounts property at Jencap Group, illuminated the current trends and challenges brokers face as they navigate the transitional market.
"It's been quite the ride," Beazley said. "From volatility spikes to profitability concerns, the market has kept us on our toes."
In this shifting market, brokers face several challenges, where even previously declined accounts may now find acceptance with competitive rates. The market dynamics demand a thorough exploration of available options to secure the best deals for clients.
In recent years, commercial property insurers have acted in response to the surge in natural disasters, inflation, rising reinsurance rates, and supply-chain disruptions. These actions have reaped fruit, as evidenced by combined loss ratios in 2023.
Beazley noted that many were below 80%, signalling hefty profits across the board. This, coupled with a less volatile renewal period, has contributed to a positive shift in volatility, impacting insurance pricing and renewals.
But it’s not a time for retail and wholesale brokers to be complacent, Beazley cautioned.
“The challenge for brokers is that a market that just gave you a flat-out declination on the account last year could come in and offer to write 50% of a primary 5 million this year at a price that's well below where was the where the incumbents were,” he said.
“It’s a tough market for brokers, retail and wholesale because you can't leave any stone unturned.”
"Anything with a wildfire exposure is still super hard. People are still super conservative when it comes to that peril,” said Beazley.
Looking ahead, Beazley is keeping a keen eye on market dynamics and emerging trends. Valuations and new models can significantly impact insurance costs and capacity; understanding these factors is crucial for brokers.
“The market is definitely on the move,” Beazley said. “It’s about making sure you don't get blindsided, which means you've got to work and spend a lot of time canvassing all the markets.”
Amidst these challenges, data has emerged as a crucial player. Insurers increasingly rely on data analytics to assess risk and price policies effectively. This emphasis is likely to continue as insurers seek to refine their underwriting processes.
"The quality of data is becoming paramount," Beazley said.
But perhaps the most intriguing development is the shift towards a partnership approach between insurers and insured parties.
Beazley pointed to a trend of insurers viewing policyholders as partners rather than adversaries. This shift involves a mutual understanding of risk mitigation efforts and insurance coverage, fostering better cooperation between stakeholders.
According to Beazley, parametric insurance is also gaining traction as an alternative to traditional coverage. It offers broader protection and potentially reduces overall insurance costs.
"Parametric has become a viable alternative to fixed insurance, and I've used it in a couple of situations where it improved the coverage dramatically for the insured and reduced the overall cost of their insurance programme,” said Beazley.
Finally, the Jencap EVP encouraged brokers to stay updated on emerging products and market trends to capitalize on opportunities. Other changes, such as in valuations and the introduction of new models like RMS, can significantly impact insurance costs and capacity.
Understanding how these factors influence the market will be crucial for brokers in guiding clients effectively, he concluded.
Are you a commercial property broker? What is your perspective on the market? Please share your thoughts below.
