P&C must carve out distinctive strategies to maximise potential: Guy Carpenter

Competition and change are the only certainties re/insurers are promised in today’s market, according to the annual review of property and casualty (P&C) results from global risk and reinsurance specialist Guy Carpenter & Company.

The company’s Risk Benchmarks Research 2019 report focuses on the risk and performance of US P&C insurers. It reports that new sources of capital and low interest rates are increasing the pressure to focus on underwriting rather than investment returns.

Business models for insurance companies have been progressing and the pace and opportunity associated with data, information and technology have influenced how risk is analysed, selected, distributed and mitigated in the insurance equation of rate, exposure and capital.

Results by segment and business model emphasise the pressure companies are under to generate profitable returns.

“Our deep analysis of industry segment breakouts reveals pockets of volatility and profitability amid the evolving challenges and opportunities faced by carriers as they carve out distinctive strategies and operational initiatives to create opportunities,” said John Trace, CEO, North America, at Guy Carpenter.

The company reported that regional insurers, with their traditional reliance on personal lines as a dependable source of profits, are facing pressures from some of the most sophisticated insurers. Over the past three years, large mutuals have experienced the effects of catastrophic events on homeowners in addition to significant competition in personal auto that began to improve in 2018 due to advanced analytics.

Guy Carpenter’s Global Strategic Advisory team found that property lines in excess of $200 billion of written premiums are experiencing pressure due to catastrophes, reinsurer rate actions and atypical reserve adverse development.

“Insurers are re-evaluating capital and how better to leverage reinsurance as market dynamics shift,” said Trace.

“In addition, companies have begun to think about how to translate this all into strategic evaluations of which lines/insureds are driving loss cost increases, rather than broadly passing rate increases to the entire portfolio.”

The company highlighted the need for insurers to pick their opportunities with care, leveraging data and turning it into actionable strategies that create opportunities for growth.