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Assessing the State of the Casualty Insurance Market

George Zanjani – While property losses from natural disasters such as Hurricane Matthew may grab headlines in the insurance press, casualty losses often drive the more significant cyclical disruptions in the U.S. market. Fortunately, casualty reserving for recent policy periods looks relatively healthy, although pressure from falling interest rates is starting to mount. The opening […]


Beyond the New Normal: Could the Surplus Lines Market Be Heading for a 10% Market Share?

A few years ago, I posed the question of whether the nonadmitted market had reached a “new normal” in terms of market share, or whether it was destined to retreat to its historic norms. To date, there has been little sign of retreat. According to A.M. Best’s annual survey of the market, surplus lines market share edged up to 7.1% in 2014. With the previous hard market peak a decade past, the market’s resilience suggests that maybe, instead of fretting about retreat, we should be considering a different question: Could the surplus lines market be heading even higher? In this post, I’ll cover three ongoing trends that could propel the market beyond a 10% share: 1) declining interest rates, 2) big data, and 3) catastrophe risk.


The Rising Importance of Property Catastrophe Risk in the “New Normal” of the Nonadmitted Market

George Zanjani – Last summer, I wrote a piece speculating on whether the nonadmitted market had reached a “new normal.” Nonadmitted market had been hovering close to 5% for a few years, even though 1) the historic norm is about 3% and 2) the hard market of the early 2000’s had ended some time ago. […]


Shifting Benchmarks: How Falling Interest Rates Complicate Performance Measurement in Long-Tailed Lines

George Zanjani – Falling interest rates are rendering traditional rule-of-thumb obsolete when evaluating profitability in liability insurance. Performance benchmarks such as the loss ratio need to be adjusted for the fact that fixed income investments return much less than they used to. Appearances can be deceiving. At first glance, liability results seemed quite strong overall […]


The Lingering Effects of a Financial Crisis

George Zanjani – Green shoots. When I’ve talked to brokers and agents in recent years, I’ve often heard about “green shoots.” That’s gone on for several years now. When I dig deeper, I usually get mixed stories: The recovery is there, but it’s uneven. Sluggish insurance market recoveries are common in the aftermath of financial […]


Disappearing … and Reappearing Risk: Part 2 – Expansion of Covered Perils

George Zanjani – In a recent post, I started exploring Steve Mildenhall’s observation that the property-casualty industry is grappling with a problem of “disappearing risk.” More precisely, he observed that losses are declining in relation to the economy. Safer cars, better fire prevention, tort reforms, and other trends have all conspired to drive loss frequency […]


Disappearing … and Reappearing Risk: Part 1 – An Overview

But, on the other hand, if risk truly is in secular decline—i.e., if the raison d’etre of the insurance industry really is disappearing—then the long term growth prospects of the industry come into question. It was this latter issue that Steve focused on in the latter part of his piece by indentifying some possible growth areas in property catastrophe and mega-liability risks.


A “New Normal” for the Nonadmitted Market?

Despite some ups and downs, the first decade of the new millennium was a good one for business volume in the nonadmitted market. Nonadmitted business (defined as any business written by an unlicensed company, excluding RRGs) soared from $11 billion in 2000 to $24 billion in 2011. Viewed differently, from 2000 to 2011, nonadmitted premium volume grew at a healthy 7% annual rate.


Are We There Yet? A Review of Liability Reserving

George Zanjani – If you’re in the habit of spending time around insurance brokers, you probably found them a bit cheerier in 2012. “Things are picking up!” was a common refrain I heard throughout the year. Many report higher volumes and firmer prices. Some are even going so far as to call a turn in […]

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