A couple of weeks ago I was in Atlanta, GA for the 2014 PLUS Medical Symposium. These annual gatherings are important for Ethos primarily because there are so many representatives of our carrier partners from all around the country in one place at one time. This makes it very easy for us to spend time with underwriters and marketing people from virtually every carrier partner we have. It’s a great opportunity to discuss our respective results, find out what new healthcare related products or product enhancements are in the works and exchange ideas. It’s also a great opportunity to spend time with many people in the healthcare industry I have come to know and enjoy over the years.
Most interesting to me is the opportunity to get a sense of where we are in the market cycle and what the future might hold from the people in the industry that are probably in the best position to make that call – underwriters. I had numerous discussions on the topic and the general consensus is we can expect soft market conditions for at least two years after new capacity stops entering the marketplace – something that has not yet happened (see Ethos’ Industry News blogs on the new healthcare divisions within AXIS Capital Holdings and Capitol Insurance Companies).
Once new capacity stops entering the marketplace excessive downward pressure on pricing will eventually be curtailed. This sets the stage for an environment that will allow carriers to price for exposures in a way that is more reflective of their actual experience. In short, it sets the stage for a firming trend. Unfortunately, that just doesn’t look like it will happen any time soon.
So, with the exception of a few classes of business, for no less than the next 2 – 3 years you can expect medical malpractice premiums to remain depressed and, at least for business placed in the E&S market, unpredictable. You can also expect carriers to continue offering new healthcare related products and product enhancements at a fast pace as they strive to differentiate themselves from their competitors, stay relevant and ultimately survive. It will be a lot to stay on top of, but as a specialty wholesaler focused exclusively in the healthcare arena, that’s one of the things Ethos does best.