August 18th, 2015

PA/MGA Risk Sharing

Posted at 1:00 AM ET

Program managers may also manage the performance of their programs through the pursuit of risk sharing on behalf of their PA/MGA partners. As we saw in past surveys, not all respondents require risk sharing. This year, a significant number of respondents said they utilize a sliding scale commission structure (92 percent versus 76 percent for the prior survey year). The percent of respondents utilizing some type of captive structure fell this year to 8 percent from 24 percent in the prior year. Alternately, 19 percent of the respondents will still pay flat commissions, a sizeable drop from 36 percent in 2012.

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August 17th, 2015

PA/MGA Performance Management

Posted at 1:00 AM ET

A carrier’s need for growth and profitability has to be closely monitored and controlled in the PA/MGA space. Every respondent in this year’s survey indicated that they had audit procedures in place to assure adherence to established risk selection and underwriting guidelines, financial billing, collection, remittance and banking guidelines, claim reporting, adjusting and settlement guidelines. Even though some changes have taken place in the number of audits conducted each year, including a notable increase in the percent of respondents doing four or more audits, rising to its highest level since 2008, this year’s results reflect the current and historical importance of the carriers’ PA/MGA management process. 

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August 14th, 2015

Week’s Top Stories: August 8 — 14, 2015

Posted at 7:00 AM ET

Tropical Depression Soudelor: Typhoon Soudelor made landfall in Hualien County, Taiwan at about 05:00 CST Saturday (21:00 UTC Friday), with one-minute sustained winds of 120 mph (195 kilometers per hour) according to the Joint Typhoon Warning Center (JTWC). Soudelor brought excessive rainfall and strong winds to Taiwan, causing inland flooding, mudslides and reports of widespread damage.

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PA/MGA Commercial Lines Appetite: A line by line comparison of respondents’ appetites in the prior year’s survey with those of this year reveals some changes in emphasis. Workers compensation and medical malpractice experienced large growth in percent of respondents who were currently writing, looking for new growth or aggressively seeking growth. The property line grew by 6 percentage points to become only the second line, outside of general liability, where the majority of respondents say they are pursuing business. Inland marine, accident & health and professional liability for insurance agents showed significant declines in business pursuit. Overall, many of the lines saw drops in appetite or remained unchanged. It appears that current economic conditions and elevating loss ratios are keeping carriers’ growth expectations in commercial lines business relatively flat.

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Chart: Global Property Catastrophe ROL Index 1990 to 2015: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2015.

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Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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Guy Carpenter Mid-Year Review Assesses Key Industry Trends: Guy Carpenter released its 2015 Mid-Year Report on the (re)insurance landscape. In addition to providing a brief recap of renewal activity highlighted in their release on July 9, the report assesses key industry trends, including a detailed assessment of mergers and acquisitions activity and highlights other notable themes such as cyber security risk, increased regulation and public-private partnerships.

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And, You May Have Missed…

2015 Atlantic Hurricane Seasonal Outlooks Suggest Reduced Basin Activity: As illustrated in the figure below, the historical proportion between basin counts and landfalls has been very volatile on an annual basis. There is only a weak correlation between hurricane counts in the Atlantic Basin and the number of U.S. landfalls. The statistical significance is a subject of some debate in the scientific community.

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August 13th, 2015

PA/MGA Operating Platform

Posted at 1:00 AM ET

Carriers continue to maintain flexibility regarding their requirements for the services they expect their PA/MGA partners to perform and what they feel they need to control. As in the 2012 survey, respondent carriers expect their PAs/MGAs to underwrite (100 percent of respondents), rate, quote, bind business (100 percent) and issue and service policies (94 percent). The survey indicates carriers expect their PAs/MGAs to perform premium audits (56 percent) and loss control services (69 percent). Most of the other services, even though not required or expected of PAs/MGAs, are often performed by them, a third party, or in many cases, the carriers’ themselves.

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August 12th, 2015

PA/MGA Personal Lines Appetite

Posted at 1:00 AM ET

On the personal lines appetite side of Guy Carpenter’s MGA survey, auto grew by 13 percentage points and umbrella grew by 6 percentage points over the previous survey in terms of pursuing growth. Both homeowners and medical were unchanged.

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August 11th, 2015

PA/MGA Commercial Lines Appetite

Posted at 1:00 AM ET

A line by line comparison of respondents’ appetites in the prior year’s survey with those of this year reveals some changes in emphasis. Workers compensation and medical malpractice experienced large growth in percent of respondents who were currently writing, looking for new growth or aggressively seeking growth. The property line grew by 6 percentage points to become only the second line, outside of general liability, where the majority of respondents say they are pursuing business. Inland marine, accident & health and professional liability for insurance agents showed significant declines in business pursuit. Overall, many of the lines saw drops in appetite or remained unchanged. It appears that current economic conditions and elevating loss ratios are keeping carriers’ growth expectations in commercial lines business relatively flat.

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August 10th, 2015

PA/MGA Program Size

Posted at 1:00 AM ET

The average size of programs targeted by carriers has changed to reflect economic, rate adequacy and expense factors. Carriers remain more flexible with their program minimum premium requirements, their willingness to consider startup programs, their willingness to front and the territorial scope in which they are willing to write business.

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August 9th, 2015

Update: Tropical Depression Soudelor

Posted at 4:33 PM ET

td-soudelor-map1-8-9smTyphoon Soudelor made landfall in Hualien County, Taiwan at about 05:00 CST Saturday (21:00 UTC Friday), with one-minute sustained winds of 120 mph (195 kilometers per hour) according to the Joint Typhoon Warning Center (JTWC). Soudelor brought excessive rainfall and strong winds to Taiwan, causing inland flooding, mudslides and reports of widespread damage.

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August 9th, 2015

Update: Typhoon Soudelor

Posted at 8:50 AM ET

soudelor-8-8smFollowing the 15 UTC update of the Joint Typhoon Warning Center (JTWC) on August 8, Typhoon Soudelor carries one-minute sustained winds of 75 mph (120 kilometers per hour), equivalent to a Category 1 on the Saffir-Simpson Scale. Soudelor has a pressure of 970 millibars according to the Japan Meteorological Agency.

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August 7th, 2015

Update: Typhoon Soudelor

Posted at 9:33 AM ET

update-soudelor-cat-i-8-7sm1Conditions are already deteriorating over Taiwan as Typhoon Soudelor approaches. Soudelor is forecast to make landfall on the Central East coast of Taiwan early Saturday local time. Expected hazards include excessive rainfall and inland flooding, together with significant winds and storm surge. A second landfall in Mainland China is expected to bring heavy rain and wind over a widespread area.

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