Florida is an opportunity for the brave, says Amwins CUO

The end of the hard market conditions could be two years away, whether or not there’s a large property catastrophe loss, according to Mark Bernacki (pictured), chief underwriting officer (CUO) of Amwins, the specialty insurance broker.

Bernacki, who became Amwins’ first CUO a year ago, believes that “this market, with five-plus years of upward positive rate moment, is definitely and definitively the longest-standing most stable hard market” he’s ever operated in.

He attributes market conditions to five factors. “The simplest is that underwriting results have been poor over the past five-plus years. That drives firming and pricing and selection decisions.

“Second, there’s a variety of social factors. The term social inflation is used quite readily now; there is not an underwriter not asking about that.”

Third, some US states, Florida in particular, face regulatory issues, he noted.

Fourth, the accuracy of risk models has been questioned in the aftermath of a degree of underestimation of the frequency and severity of some events.

Finally, he said, the global economic environment is presenting several challenges. These include supply chain issues, a potential recession in some economies and higher interest rates.

But Bernacki is confident that opportunities abound for carriers willing to take risks. “I’m a big believer that when others run it is the time to come in and capitalise on the opportunity,” he said.

He highlighted property-catastrophe, and specifically southeastern US property-cat, as a key opportunity, noting that “some of the best underwriting metrics I’ve ever seen in the property side are currently happening”.

However, he advised those wanting to take advantage of the opportunity to be cautious and price in the unexpected. He admits that finding reinsurance partners could be a challenge in the run up to the year-end renewal.

“I’m expecting continued firming and very late quotes and scrambling for capacity. I would anticipate continued holes in programmes that are looking to be filled after the effective dates,” he said.

In his new role over the past year, Bernacki has spent time observing some of the changes and identifying opportunities within what he loosely defines as the “programme space”. Amwins works with many managing general agents (MGAs) and managing general underwriters (MGUs) in the US and globally in a space he says is growing fast.

“This programme space in the property and casualty (P&C) market is the fastest-growing area we’ve seen and it’s evolving quickly. We’re seeing many underwriters leave balance sheet companies or insurers and start MGAs or MGUs because they desire a more entrepreneurial and flexible spirit,” he said.

Bernacki has focused on creating uniform underwriting performance metrics across Amwins’ various programmes and pushing what he labels “strategic capacity building”.

“In the old-school programmes, each programme tended to be placed with independent and sole capacity,” he said. “We’re taking a new strategic approach that we believe will mean more stable underwriting performance and less volatility.

“This is giving Amwins the opportunity to build capacity in a new and differentiated way,” he concluded.