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Is the current commercial lines soft market a repeat of personal auto in 1998?

May 27, 2008

Analysis of:MGAs Need To Prepare For Hard Market Now | www.propertyandcasualtyinsurancenews.com

One observer notes that abundant capital and weak underwriting standards are leading to bad decisions in commercial lines insurance. If so, the current commercial lines soft market has parallels to the personal auto soft market of 1997-2000. Company management must be especially vigilant in this market environment. Investors should look for insurance company management to clearly articulate the business risks and the metrics and procedures in place to manage those risks.

GMAC Must Keep Insurance Rating Agencies Satisfied

May 9, 2008

Analysis of:GMAC Buys Time for ResCap Unit as Bankruptcy Looms | www.bloomberg.com

GMAC, LLC includes real estate financing, auto insurance financing, and insurance.  Insurance is delivering much needed income and stability while the mortgage business hemorrhages and the auto loan business stagnates.  But insurance requires a very stable capital structure, and the insurance rating agencies like AM Best are watching GMAC closely to see how it resolves its mortgage problems.

Smart Homeowners Insurers Use More Than Cat Models

April 29, 2008

Analysis of:Insurers Overly Focused On Cat Models, Says Expert | www.propertyandcasualtyinsurancenews.com

A recent news story quotes the insurance modeling pioneer Karen Clark as saying, with keen insight, that insurers rely too much on catastrophe models.  This analysis provides background on cat models and how homeowners insurers use them.  The analysis also offers suggestions for evaluating a property insurer's skill at applying modeled results in conjunction with other information.

Standard insurers reach downmarket for nonstandard auto

March 20, 2008

Analysis of:Standard Insurers Nab More Nonstandard Auto Biz | www.propertyandcasualtyinsurancenews.com

PGR ALL TRV FAC AFFM HALL IPCC ASAM 1. Softer market invites auto insurers to consider looser standards for growth. 2. Similar expansion occurred during the last soft market phase in 1998-2000. 3. Pricing techniques are more accurate, but underlying characteristics of nonstandard customers require more than sharp prices. 4. Low retention makes non-claims expenses more important.

Auto insurance channel conflict: More smoke than heat.

September 26, 2007

Analysis of:Agents unnerved by Progressive changes | www.marketwatch.com

Does Progressive's (PGR) consolidation of its Direct and Agency business units place added pressure on agency sales?  Progressive Insurance Company has been fighting fears of channel conflict for 15 years.  A recent UBS poll of agents brings the issue to the fore again.  Many independent agents claim to be reluctant to place policies with PGR because of fear that the company will cut them out and go directly to the policyholder.  But agents' business choices have consistently shown that competitive prices and efficient service far supercede channel loyalty as influencers of policy placement.

Fla Auto Insurers' Revenue Sunsets with No Fault Law PGR, ASAM, SAFC, ALL, MCY, TW

June 26, 2007

Analysis of:Will auto insurance become optional? | www.miamiherald.com

Florida Auto Insurance No-Fault law is scheduled to sunset October 1, ending 30 years of mandatory insurance. Premiums could drop by 20 - 30% as PIP coverage goes away. BI and UM Liability claims freqency will increase.  Who knows how much? Nonstandard auto writers are most affected. but standard and preferred auto writers are not immune.  As always, there will be winners and losers.

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