There are 5 major trends that we at Jackson Sumner & Associates are expecting for 2019. It doesn’t take a crystal ball to predict them,…the industry has talked a LOT about them in 2018,…but it will be in 2019 where the industry will really start to feel their full force. Rest assured, Jackson Sumner has taken action to keep our position as strong as possible in our E&S marketplace so you won’t face these challenges alone.
1) Property Rates On The Rise
No, you’re not imagining it. There is an increase in property rates, and for good reason. The weather events of 2018 were terrible, but they’re also being stacked on top of prior years’ weather events that create a huge cumulative effect to carriers and what they’re able to write. Hurricane season at least has a forecast, but what about unforeseeable events like the California Wildfires? These events, year-over-year, are putting a dramatic strain on carriers’ results. We see it impacting habitation, restaurants, and older buildings the most at this point, but we expect this trend to continue.
2) Liquor Liability Stressors
The Liquor Liability market will continue to tighten up. Companies are jumping in and out of the market rapidly. SC is where we are seeing this most severely. Recently courts are interpreting alcohol-related criminal laws to act as a dram law (which SC does not have) and those courts are allowing plaintiffs to seek higher compensation than in the past, which is having an effect on the market.
There is also a changing marketplace. With the introduction of brewpubs and restaurants with high-end IPAs, microbrews, fancy wine and flight courses; looking at dollar amounts sold for percentages may not be a good representation of how much alcohol an establishment actually serves in relation to food anymore.
3) Lloyds’ Waves Cause Ripple Effect
Lloyd’s of London has gone through a litany of changes recently, installing new leadership and board after seeing the need to improve performance and expense ratios amidst Brexit fears. They just named a new CEO in John Neal in September of 2018, but the changes aren’t finished yet.
Lloyd’s is becoming considerably tougher on the business plans submitted from syndicates, and rejecting several. They are pulling out of lines of business, reducing aggregates and limiting capacity. The question is, are these changes limited to Lloyd’s, or will these trends jump the pond and affect US markets as well?
4) Transportation Markets Put On The Brakes
The transportation Market has been hardening for a while now, and the trend is set to continue with companies tightening up guidelines, reducing their distribution channels, or pulling out altogether.
This contraction is largely due to increased demand in our economy requiring more miles, more drivers, and fewer idle trucks. Couple that with more costly claims due to higher speed limits, more expensive tech in vehicles, and a litigious society that leans towards increasingly larger payouts and it’s a recipe for what we’re seeing now. (Insurance Journal recently had a great article on this very subject)
5) The Aging Demo Can Delay No Longer
Baby Boomers’ looming retirement is here. They’ve tried to delay it as long as possible, but for many, the need for knowledge transfer from this older generation to the younger can be delayed no longer, especially in the insurance industry. We’ve heard it coming for a few years now that “50% of our industry will retire in the next 5 years.” This will leave a large knowledge gap in our industry and the need for knowledge transfer/training will be more important in 2019 than ever before.
JSA has always been a big believer in knowledge transfer. From Gary Anderson passing down his knowledge to Danielle Wade, to her now passing down her knowledge to even younger underwriters. Wayne Sumner is here every day, and he’s not retiring ANY time soon, sharing his wisdom and lifelong underwriting skills. Roughly HALF of our employees are under 40, so we feel good about our future. We encourage our employees to get higher education and further designations to build on their knowledge. We also provide CE courses throughout the year to share our knowledge of the E&S market with agents.
CONCLUSION:
If anything about this future forecast frightens you, you’re likely not already doing business with JSA. We are a company that has always looked to the future with pragmatism, not fear. It’s that attitude in our people that builds relationships with companies to be able to offer markets when markets get tight. That longevity, in turn, allows us to weather the storm (pun intended). We have plenty of markets, backed by strong relationships and ethical standards, that can find coverages for your needs.
