Asked for the latest thoughts on the role of the broker in managing client expectations against the headwinds of a difficult casualty insurance market, one panelist during Advisen’s Casualty Insights Conference said the “art of the broke needs to come back.”
“It really needs to be more than an email with a spreadsheet to the markets,” added Mike Vitulli, national casualty practice leader at Risk Strategies, during the April 6 event in New York. “Go out and talk to your underwriter. This is an important time.”
Vitulli said brokers need more than ever to present risk properly; get the client of the phone. Better yet, he said, “Get out of the pajamas and go to the office again—see people.”
Brokers need to “use relationships for good,” Vitulli added. Approach familiar underwriters and ask for help, especially when a broker has invested the time necessary to understand that a client is a good risk.
One underwriter on the panel, John Ferguson, the head of excess casualty at Zurich North America, said the carrier prefers to engage broker-to-client throughout the year—not just at renewal time—to “set expectations on what our hopes and dreams are.”
“You have time to digest that and have conversations and hopefully come to an amicable resolution,” Ferguson told the brokers in the room.
Jesse Paulson, excess casualty leader at Marsh, said brokers can sometimes “use the market as a crutch.”
“We should never do that,” he said. “Focus on the strategy, working with a client on how to compete with the forces of the market. Be honest, but don’t use [the market] as a crutch.”
The casualty insurance marketplace continues, on average, to ask for rate increases in most lines of business in the face of large losses due in part to factors such as sympathetic and unpredictable juries, anti-corporate sentiment and inflation. Though recent reports indicate the pace of rate increases has slowed, it is difficult to say whether insurers have reached a level of rate adequacy considering the economic activity—and the courtroom—have yet to reach pre-pandemic levels.
Ferguson said his business has done a lot of work on its book for rates and underwriting discipline and has a “pretty strong, fighting chance to be profitable.” When quoting individual risks, the carrier wants and tries to be fair, but the risks remain dynamic.
“We want a number out there that we can live with—that the client can live with. But as soon as we put it in writing, it essentially becomes inaccurate. Something has changed,” he said. “We do our best to give [clients] a good representation of what we feel is an adequate rate, but things are moving constantly and, unfortunately, they are not getting better from a carrier perspective.”
Vitulli said a large carrier he recently spoke to revealed “they love their book right now, which means they feel they finally got to a place where it’s priced right,” but from a client perspective, non-renewal notices are still coming.
“I always tell clients that this is the dangerous part of the market,” Vitulli added. “When the market is hard, it stinks for everyone. We’re at a point now where there’s going to be people who are opportunistic and take advantage.”
He said clients need to be careful, and brokers need to be aware, because the marketplace may become more competitive.