Powell Brown – President and CEO
Still a lot of capital in insurance
In summary, there continues to be a lot of capital across the insurance market place. However the recent storms, fires and earthquakes may have implications on pricing in 2018. At the present time, we don’t have a clear view on the potential impact for next year. But there are a lot of discussions about rate increases for coastal properties. If there are proposed increases which we think there will be, the question really is will they stick. Certain markets are testing that philosophy right now.
Right now I hear and what everybody else is hearing out there about the market place and what people are speculating on. What people are speculating on and what the market will bear are two different things, until we start to see rate increases sticking. I am guardedly optimistic or just guarded in regards to what that would do to our organic growth…But if anybody is telling you they are getting ramped up for a hard market, I believe that’s a little premature.
Economy pretty good
And so I think the economy is pretty good. I think that we’re seeing our clients thinking about it in a manner where they are making investments in their businesses, so that’s a positive.
Reinsurance got pounded
I’m not a reinsurance broker so let met process this. Here’s what I understand and this is how I think this is going to play out. As you know retrocessional reinsurance is reinsurance for reinsurance companies. They got pounded in the storm, and a lot of that is in London, but it’s all over the world. So the retro market got pounded. So that’s going to have to react or try to recoup.
Then you have the reinsurance market, they got pounded. And the reinsurance market, as you know, one of the most damaging ones was actually Mariah. So it’s like keep hitting you when you’re down in that market. And so let’s just say that the rates are – they try to get significant rate in reinsurance. It really depends on the primary carrier and what they’re trying to do.
If everybody’s cat reinsurance program came up at the same time, then I think that there could be a higher potential for rate increases that could stick. Having said that, I know of several carriers which remain nameless who already have their property programs placed prior to the storm. So they’re going to operating from a positon of strength, not a position of weakness.
So, I think there’s a lot of moving parts that go in to it, and I know that there are some people out there that are frothing, because they think this is going to drive the market up. Like I said, I would rather create an expectation that we see flattening and we hear people talking about rate increases, but we’re not seeing any big rate increases sticking like, you might have heard, number one. And number two, really a lot of this change won’t happen until after the year. And the question is on some of these primary carriers, how quickly can the insurance carrier get the message from the head to the foot on what they want to do in executing a pricing strategy or increase.
So time will tell Mark and I wish I could be more definitive. But I do know that the restaurant market and the reinsurance took some severe losses and it will be interesting to see how they react and thus the primary season how they react as well. They will not pass through dollar-for-dollar or per percent increases in to the primary market, it just won’t happen.