Insurance Information Institute president and former IIABNY director Bob Hartwig has some advice for U.S. insurance carriers:
The insurance industry “needs to not just ride the rising tide in,” he says. “There is a new trajectory of growth in the American economy.”
Uncharacteristic industries not typically involved in economic rescue are leading the way, paving a road to opportunity for insurers who recognize it, says Hartwig, who recently gave a presentation at the National Association of Mutual Insurance Companies’ Claims Conference in Savannah, Ga.
Energy, natural resources, agriculture, health care, and transportation and infrastructure are at the beginning stages as the country’s newest growth engines, Hartwig says.
“And many insurers would find that they are underexposed to these sectors,” Hartwig says.
via www.propertycasualty360.com
Hartwig says that the insurance industry needs to venture into some different waters if it wants to take advantage of a recovering economy. Waiting for a hard market to bring sharply higher rates, he says, is a mistake. In his opinion, the real opportunities for improved profitability lie in some fairly hazardous industries. In my old commercial underwriting days, I might have ended up in solitary confinement if I had written energy or mining accounts. We had a program for some fruit and vegetable farms, but we didn't make a big push for agriculture business, either.
Hartwig's opinion makes intuitive sense to me, but I wonder whether insurers who are nervous about their loss ratios will buy it. Particularly in the Workers' Compensation arena, the classes Hartwig is talking about can produce some severe losses. The loss potential must put a scare into any rational underwriter. Still, if his predictions are correct, and insurers can reap the benefits of growing exposure bases, timidity may result in golden opportunities lost.
What do you think? Do you agree with his conclusions? Will insurers aggressively pursue these accounts? Start the discussion in the comments.
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