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  • Writer's pictureChris Burand

Hard Market Opportunities

In the old days, typically less well-run insurance companies would sell price for five to seven years and then discover they had run out of surplus. They always blamed market conditions, but it was their own incompetence.

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At that point, the well-run companies who had been doing just fine, and who had lots of surplus, would write a ton of business for two to three years. They were the only game in town, had the surplus, and could charge elevated (i.e., higher profit margin) prices.

Then some combination of new surplus would arrive, and the price sellers would begin selling price again.

This is the first hard market in 20 years and it is hard. Like most hard markets, it is driven primarily by incompetence. When you get used to having marginal surplus for years and get away with it, and then lose $1 billion or $4 billion in your investment portfolio, surplus dries up quickly.

So here's to the missed opportunity of those carriers who have been mismanaging their surplus for years all the while complaining about how Progressive was always beating them and complaining about agents selling Progressive at lower commission rates and complaining about how Progressive has an advantage because Progressive only writes what they want to write while the they have to write whatever agents submit (this is about the stupidest thought process I've ever heard, but I've heard it a lot), and so on and so forth.

According to Coverager, Progressive's net new policy count between January 2023 and May 2023 has been cut almost in half. Would it not have been great for those carriers and their agents, if they had managed their surplus better so they could have written hundreds of thousands of new accounts?


NOTE: The information provided herein is intended for educational and informational purposes only and it represents only the views of the authors. It is not a recommendation that a particular course of action be followed. Burand & Associates, LLC and Chris Burand assume, and will have, no responsibility for liability or damage which may result from the use of any of this information.

None of the materials in this article should be construed as offering legal advice, and the specific advice of legal counsel is recommended before acting on any matter discussed in this article. Regulated individuals/entities should also ensure that they comply with all applicable laws, rules, and regulations.

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