The Consultative Broker™ Briefing
Volume V, Number 6
A Free Publication of C.R. Ekern & Company
888.670.1177
www.crekern.com
Copyright, C. R. Ekern & Company, 2007

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July Marketplace Forecast

Ahhhh, springtime is in the air.  It is a time of blossoms, renewed growth, and warm afternoons.  It is also a time for Consultative Brokers to ponder their success on July 1 renewals!  Those of you that are working on July 1’s know that the marketplace has changed slightly.  There does appear to be a little more capacity than six months ago.  However, you need to be very careful as some of it may be a mirage.

There have been some significant factors that will continue to contribute to instability:  Here is what you can expect:

1. Property terms will be loosened considerably.  The players that remain have been able to increase their reinsurance terms considerably.  Frankly, the appetite for new business seems to be coming back.  Some brokers have reported actual decreases in rates over the past several months.

2. Casualty terms will not reduce.  In fact, most of you will see increases in the vicinity of 20%.  And watch out for even greater increases on some larger accounts in difficult classes.  Wholesale brokers are reporting that the April 1 renewal season was more difficult than the January 1 placements!

3. Package business for middle market accounts will flatten at around a 15% increase.  The carriers that remain in the market are beginning to quote again on some classes of business that they declined last year (watch your back!!)

4. The competition is returning to professional liability for the higher premium deals.  The smaller deals however will see increases of about 30%.  An interesting thing is occurring in the Hospital Professional arena, where carriers are continuing to demand higher rates.  A growing number of these institutions are considering self-insurance as they revolt against spiraling costs.

5. Your D&O accounts will continue to be difficult placements.  The loss of the Kemper capacity will affect certain classes of business and hit the D&O market hard. 

6. Underwriters of any financial service industry will be extremely skeptical of financial statements based upon losses arising from corporate fraud (you know the ones!)  Therefore, you must understand these accounts like never before.  What’s more, you must be able to explain them to others.

7. Rates in the excess marketplace will continue to increase substantially.  Remember, your excess terms are a reflection of the lead umbrellas.  Look for lead umbrella pricing to increase 30 to 50%.  If this is the case, your excess will increase based solely on the lead.

All of the above brings to light another very important point.  Successful Consultative Brokers do not depend upon the marketplace to attract and retain clients!  Remember, the market is the same for everyone.  It is your ability to create a perception of value that provides you the greatest amount of success.

Best regards to all Consultative Brokers,

Rob Ekern
President
C.R. Ekern & Company

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Consultative Brokerage® Techniques are utilized by agents and brokers across North America in the development and retention of upper middle market revenues.  The Consultative Broker Briefing is delivered electronically free of charge to selected agents, brokers, and other insurance professionals across North America.  To subscribe to The Consultative Broker Briefing, please click here.

Copyright 2007 C.R. Ekern & Company