Page 9 - 2016 State of the Market from AmWINS

AmWINS State of the Market | 79
Willsey, executive vice president and
casualty broker at AmWINS Brokerage in
Farmington, Connecticut.
In sharp contrast to the general liability
and products markets, automobile liability
continues to be challenged due to losses.
The commercial auto market reported its
fifth consecutive underwriting loss year in
2015 and is on track to do the same for
2016.2 For-hire transportation continues to
be the most problematic segment, with a
shortage of drivers contributing to adverse
loss trends.
“There just isn’t a big enough pool of
qualified drivers available to fill the seats industry and state, with New York and
in trucks. Companies fill them with people
who have less experience than they
should, and claims happen,” Dillon says.
Nevertheless, insurance capacity
has remained steady in both primary
and excess auto markets, even with
Zurich’s pullback from part of the U.S.
transportation market and the Lexington/
AIG withdrawal from the excess market.
Berkshire Hathaway, Gemini, and Aspen
remain key players, and the market is
seeing some new alternative capital
coming from London, Bermuda, and even
domestic sources.
“There was some initial panic because
Lexington served in the lead excess
space, offering up to $10 million, but there
proved to be plenty of capacity to take on
good accounts with little rate increase,”
Dillon says. “Accounts with loss problems
or poor safety scores are feeling a bit more
pain, but markets are offering swing plans
and corridor deductibles so that if the
insured puts more skin in the game they
can still get the premium they want.”
The industry-wide combined ratio for
workers’ compensation dropped below
100 in 2014, remained under 100 in 2015,3
and is continuing a profitable trend this
year as well. That has led to a broadened
underwriting appetite across the line.
2 Fitch Ratings 3 NCCI
Source: AmWINS casualty lines account data
“Competition is picking up. Everyone Automobile liability is frequently the key
seems to want to write workers’ driver in the casualty reinsurance market.
compensation. We’re running into more While some companies are retreating from
situations where standard markets normally the for-hire trucking arena, other carriers
wouldn’t have written the coverage, but in utilizing reinsurance support are stepping
order to write the package they will take all forward to fill that void.
of it and undercut the wholesale market,”
says Matt McCue, associate managing Casualty reinsurance rates overall, unlike
director at AmWINS Program Underwriters property, have remained relatively stable
in Camp Hill, Pennsylvania. over the past year. “It is fairly common
to see flat to slightly lower renewal
There are some exceptions by both rates in spite of the significant capacity
available in the market,” says Deborah
Florida being among the tougher markets. Sutherland, senior vice president at THB
Additionally, workers’ compensation Intermediaries in Atlanta, Georgia.
reforms and legal challenges to those
reforms in Texas and Oklahoma continue New York construction business is
to shape the market in those states. becoming more difficult to place. Some
reinsurers are holding the line on rates in
“In Texas, non-subscription participation New York while others are exiting the state
keeps growing as additional employers altogether, determining it is impossible to
take advantage of it, a move which write business profitably. However, outside
creates growth challenges for brokers New York there are more reinsurance
in the traditional workers’ compensation opportunities available from companies
market,” says Jerry Murphy, executive looking for support of their construction
vice president and casualty broker at insurance business. With the exception of
AmWINS Brokerage in Dallas, Texas. “In residential exposures, construction is an
Oklahoma, the market could be looking area many reinsurers are seeking to grow.
at the dual impact of a rollback of law Likewise, most reinsurers are actively
and escalating rates, depending on the seeking other casualty lines to balance
state’s Supreme Court decision around their auto book.
challenges to 2013 reforms.”
• In general liability, accounts with few problems are seeing decreases of up to 20 percent.
• The auto market is challenged by losses, Lexington's exit and Zurich's pullback.
• Profitable results in workers’ compensation has competition picking up.
• New York construction remains difficult to write profitably.