Most of us are probably in the midst of or even have completed their 2023 Strategic Planning. I don’t believe it’s too early to anticipate what the market will be like next year, but it will certainly have a significant impact on all our business outcomes. So, I thought this month’s newsletter may be a good forum to discuss the state of the industry. Naturally, I pulled out my Magic 8-ball and asked if the market would be hard, soft, disruptive, competitive, or difficult. The answer was ‘Yes.’
The majority of Reinsurance contracts renew on January 1st of every year. But how carriers use reinsurance has evolved over the years. First of all, the number of reinsurance markets has dramatically shrunk. In the olden days, carriers would structure deals with low attachment points. Their reinsurance deals guaranteed they’d have less exposure to big losses but smaller profits. Fast forward to the current era, where we seem to have the perfect storm of huge CAT losses nearly every year, the consolidation of reinsurers, and the reduction of equity on the balance sheets. Carriers and reinsurers alike will be looking to reduce limits and their exposures. Even I can add 3 plus 3; lower limits, fear of big losses, and less competition will drive rates up.
With global inflation every bit a factor in insurance as it is for consumer goods, policyholders will likely end up paying more for their insurance. In my opinion, (worth about as much as FTX bitcoin) I believe reinsurance costs will drive premiums higher across the board in 2023. However, some carriers will find pockets of profitability, which will increase competition for that business and drive premiums down for some insurance consumers.
Though insurance consumers may opt for larger deductibles or even put in place better safety measures to control risk, how can we help our customers purchase the coverage they need as well as receive the services that reflect true value? I will defend this position to my last insurance day, cheap insurance does not equate to good value.
As we anticipate the insurance cycles and prepare for what the markets will do, it’s best not to be surprised. At Tuscano Agency, we fight hard to get the best quote, which includes the best pricing. But don’t beat up my underwriters if the capacity has shrunk and the premium balloons! Tuscano is here to help you regardless of the kind or complexity of your risk. I will say, that when you do have a brokerage piece of business the best thing you can do is call a Tuscano underwriter before you call anyone else. They will be honest with you about the market availability and who they would approach. Other brokers are not doing you any favors when they flood the market with a submission just to block every market known to mankind. Whether your account is a slam-dunk or is a pig with lipstick (sorry no offense intended to the pigs), we will keep you in the loop and be responsive to your expectations.
I am ever so thankful for all of you who work with us and keep taking time to read this missive. I hope you have a wonderful Thanksgiving weekend. The Tuscano office will be closed the Friday following Thanksgiving to give our team a well-deserved extended weekend. I hope you have one too!
Happy Thanksgiving to all and to all, a moist turkey!
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