Bob Peterson: Still ‘wiggle room’ for price increases due to market ‘peaks and troughs’ | Computer maintenance
The “peaks and valleys” of hard and weak market fluctuations do not “do much good in terms of results for end customers”, especially since “there is still room for others. [price] increases âdue to today’s challenging market conditions, said Bob Peterson, executive director of London market risk at independent London market broker Lonmar.
Addressed exclusively to Insurance terms Regarding the current tough market, Peterson began by explaining that the directors and officers (D&O) insurance industry “is a big, big question mark” that “still has a good old fashioned way of doing things because nobody does not really know what the consequence of the pandemic will have on this class of companies â.
He continues: âThere is still room for [price] increases.
“[As for] where the market moves is about capacity and it depends on the industry of the clients and the type of business they are in – some are more difficult than others.
For Peterson, one of the issues surrounding the tough market is that the insurance industry “doesn’t appreciate customers going through the peaks and troughs of this soft, tough market.”
âThe client would have preferred a more stable line than peaks and valleys, weak and difficult markets. I’m not sure that does much good for the industry itself in terms of the end result for customers, âhe says.
âNo customer likes surprises and I think as an industry sometimes we tend to forget that all those peaks and troughs, tough and weak markets, have a direct impact on the customer’s budget, so it’s important that we have some consistency around what’s going on. and we can deliver the good news that people want to see.
Lonmar Managing Director David Pexton adds, however, that there have been “signs of stabilization in some areas”.
He said: “In the [professional indemnity] market, [it is] is certainly starting to stabilize, even if it is hard – the terms are still difficult and the formulations are stricter. Real estate is also stabilizing.
âThe more capital comes into the industry, the more capital comes into Lloyd’s and therefore it has to be fueled. There is no sign of [price] decreases further, but there is stabilization.
While he acknowledges that the prices for professional indemnities (PI) may “stabilize”, Pexton still notes that “it is a very difficult market, without a doubt”.
With this in mind, it is important that brokers dealing with IP have expertise and provide “one-on-one service”, to effectively communicate difficult premium prices related to the difficult market.
He explained, âBecause of how the market has gone up so quickly and the prices have gone up so much, it’s pretty hard to convince your customer that they should be paying so much money.
âYou need a very specialized and experienced team to deliver these messages to the customer who [is] pay a lot more money.
This skill set is something that Lonmar is gradually developing – although the company already employs a dedicated team of 10 people to manage IP risks, the company is recruiting in this area as well.
âWe are quickly becoming, in this area of ââprofessional lines, one of the largest independent brokers,â adds Pexton.
Business as usual in London
Along with current trends stemming from the hard market, the Covid-19 pandemic and its resulting impacts remain significant for Peterson, especially in the London and Lloyd’s market.
For him, underwriters must get back to work in person because it is “the only way” for the British capital to “retain this leading position in the world market” in the insurance sector at large.
He explains: âLondon is recognized as the epicenter of insurance investing in the world. If you look at it from a pandemic perspective, we’re very, very keen to encourage Lloyd’s to bring policyholders back to the rooms so some kind of normalcy can return.
âIt is vitally important that we have the underwriting skills that brokers can refer to because that is the only way to maintain this world leading position in the market.
âFrom an underwriting and brokerage perspective, there is no doubt that what Lloyd’s and the London market have stood for and represent is a unique way of trading and doing business. It is important that we return to this position as soon as we are allowed to do so. “
Peterson adds that helping clients cope with the economic fallout from the pandemic is also important for brokers.
âIt’s about understanding and trying to be a part of that unit within the industry, understanding what’s going on today and how best to handle it,â he says.
For example, Peterson explains that brokers can enter into agreements with underwriters that do not impose high minimum deposit premiums and that tailor-made renewal terms that reflect the economic downturn of commercial clients should be considered, while providing for a potential examination six to 12 months later. . This means that customers do not have to pay an annual premium immediately.
Peterson notes that underwriters have so far been keen to support such measures, which are viewed positively by end customers.