Posted by: jmwilsonmga | October 16, 2012

Slowly I Turned

We welcome Brian Schwarzbach, VP of Underwriting at Atlantic Casualty

Insurance Company, to the J.M. Wilson Blog as a Guest Blogger!  We hope you enjoy his article “Slowly I Turned”, which originally appeared in the “ACIWitness News” E-newsletter.  Please share your thoughts and comments!

“There is a very old Abbott & Costello routine called ‘Niagara Falls,’

Brian Schwarzbach
VP of Underwriting
Atlantic Casualty Insurance Company

but it is better known as ‘Slowly I Turned.’ The routine and the line slowly I turned has nothing to do with insurance, but the words slowly I turned do serve as a good metaphor for an insurance market we should all be praying for.

Currently, we see the market turning and transitioning in a good direction. Rates are increasing and it does appear some underwriting discipline is returning to the marketplace. We probably will not see a return to a classic hard market, with momentous rate increases and trimming of coverage grants, but that is not necessarily a bad thing. A slow, deliberate and, most importantly, a sustained return to discipline is in the best interest of all.

Adequate prices are in the best interest of insurance carriers, general agents, retail agents, reinsurers and, ultimately, policyholders. A financially secure industry allows for capacity to write business and the ability to pay losses; many of which manifest years after the policy was written. It allows for not only the payment of commissions, but also the ability of a carrier to share the underwriting profits via contingent commissions.

The E&S industry is now recognizing loss ratios impacting income statements. Underwriters need to underwrite and price with ultimate loss ratio profitability in the forefront of their mind. We need to make a reasonable profit on the business we are in: insurance.

Our reinsurance broker, Aon Benfield, reported in June of this year that insurers’ reserve redundancies decreased to only 2% of total booked reserves, with the release of $12.7 billion in reserves in 2011. The report stated: “The reserve redundancy in the two most recent accident years has decreased from $11 billion to $3 billion, reflecting continued market pricing pressures.”

Let’s not continue to succumb to market pricing pressures. It’s time to make money at what we do and not rely on outside markets and reserve redundancies. At Atlantic Casualty, we are positioning to achieve our mission statement, which is to provide specialty lines property and casualty insurance products and services, generating an underwriting profit, which enables us to be financially secure for our stakeholders.

As Lou Costello said: slowly I turned…step by step…inch by inch…”

Thank you to Brian for allowing us to share his thoughts!

Disclaimer :  This article is for informational purposes only.  There is no legal advice being suggested or proffered.  The author assumes no responsibility or liability for the actions taken or not taken by the readers based upon such information.  This article is the opinion of the author and is not supported or endorsed by J.M. Wilson.  It should not be relied upon and may contain inaccuracies or content may have changed over time, contact your underwriter for the most current and accurate information.  Any comments or responses are the opinions of their authors.  Content on this site is believed to be covered under Fair Use. Legal

Copyright 2012 J.M. Wilson Corporation

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