Leader: Discipline and stability will rule the day

Boring has just got sexy. As tedious and repetitive as the insurer boardroom rhetoric has become, the reality is that rates are still not moving. Look past the broadsides emanating from insurer chief executives, and the underwriters on the ground are still distorting the picture. Our quarterly rating summary, in partnership with Acturis, provides an insight into the numbers, accepting that some lines are heading in the right direction within niche markets (see pages 26-27).

Grant Ellis decided to survey 100 independent Broker Network members in an attempt to better understand the considerations (see page 9). One view is that to appreciate the impact of the recession, you need to study the economic pressure on SME clients as well as the volatility associated with their purchasing decisions. Another is that both insurers and brokers are just suckers for new business come renewal time and that repeat business is being repeatedly brokered and shifted between insurers like a feeding frenzy in a zoo.

Ellis points to the main beneficiaries of this climate as being agile, smaller insurers and managed general agencies. And he explains that the market will not harden until these market pricing discrepancies have been eradicated. But we’ve been here before, haven’t we? It’s just that this time, the economics of the situation means that the answers are not just wrapped up in herding the pack in the right direction. Now, it’s about understanding how a soft market plays out in a recession and while surgery is being performed to the horrific structural damage inflicted upon the capital markets.

In the meantime, the same old message will be repeated within the corridors of the Biba conference and at its associated private dinners this week—discipline and stability must be the order of the day. If you’ve heard it once, you’re sure to want to believe it now: rates must harden, brokers must work harder to earn their buck, underwriters on the ground must start obeying their chief executives and the process must be managed in a coordinated way in order to avoid an over-correction that your clients cannot sustain. Now that’s not boring, is it?