The announced extinction of hard and soft markets drew comments from two brokers, who point to a common denominator for the current state of affairs in insurance.
Rohan Dixon, chief brokering officer at
Aon Risk Services credited an increased access to data for the current extended soft market, as companies are able to underwrite risk that is very location-specific, minimizing certain exposures and aggregations that they weren’t able to in the past.
Andrew Baile disagreed with Dixon, but did concede that a soft market will continue for 2014.
“At least one insurer has made it known that that a hard market is in the works,” Baile commented. “Certainly with the natural event losses we have had this year reinsurers could be thought to be persuaded to hike rates. Then insurers will follow lock-step. This won't happen until the next renewal season coming at the end of this year.”
Roger Wingfield agreed with Dixon – but to a point.
“The hard/soft market always coincided with much higher interest rates and return on equity that hasn't happened for quite a while” wrote Wingfield. “After 45-plus active years in the insurance business, it would be nice to see good business sense drive our business rather than idea of corporate exec's and managers responding to actuarial manipulation.” (continued.)
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He stressed that higher interest rates are needed in Canada, as investors are not investing and getting an adequate return.
“Someday it will happen,” added Wingfield, “but maybe not during my career.”
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