Joint ‘I’ Day Focuses on Hard Market

Submissions are coming in by the truckload. Renewals obviously are something that we’re very concerned about,” said Derek Borisoff at this year’s Joint “I” Day on April 2 in Universal City, Calif.

“One of the biggest problems is that we may not have a market for every renewal that we’ve had. We’ve got some accounts that we’ve written for years, and all of sudden we don’t have a market for that particular account,” continued Borisoff, president & CEO of Monarch E&S Insurance Services.

He expressed the need for not only early submissions, but also for proper supplementals and documentation. “That’s really what’s going to get your particular risk to the front of the stack.”

The executive panel continued with Frank Kotarba, president & CEO of Golden Eagle Insurance Corporation, who likened the current marketplace to a popular movie, saying: “All conditions converging creates the perfect storm,” Kotarba said.

Kotarba discussed the different ways companies and agents are dealing with the marketplace. Companies, he said, should center on improving profitability by focusing on four areas including underwriting, pricing, agency management and management expenses.

As for agencies, Kotarba suggested they focus on routine renewals, and the difficulty in doing do at this time, price increases, appetite changes, educating the customer base, and preparing for the renewal cycle. Other aspects to focus on include value-added services, revenue management, and profit sharing plans.

Kotarba estimated about one to three years until the market will ease. “There’s always the potential for another event. That looms over us,” he added.

Mary-Lou Misrahy, president & CEO of Fremont Compensation Insurance Group, focused on the changes in the workers’ comp marketplace since the early 1990’s.

“Over the past years premiums have started to grow again, and we are looking at, unbelievably, $11.7 billion in California for 2001, and that’s understated. If anything, $13 billion is a pretty accurate number of where we are now, where $9 billion… was considered so prohibitive that employers were going to leave the state,” said Misrahy.

Misrahy credits medical costs as the driving force behind the increasing premiums. With the passage of AB 749, the Workers’ Compensation Rating & Inspection Bureau (WCRIB) estimates a $3.5 billion increase in benefits only, bringing the total cost of workers’ comp premiums in California to a foreseeable $16.5 billion.

Misrahy noted the lack of markets to choose from, as well as the importance of the need for expertise to be able to control losses.

Bruce Norman, senior vice president of Mercury Insurance Group, wrapped up the panel by discussing the importance of commitment as a key to success in today’s disarrayed marketplace. He noted several companies that leave the business when things get tough.

“In my opinion, if you are not in the homeowners market, and you’re in the auto market, it’s going to be tough to compete.”