March
18
 
2011
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People Matter

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By Tracey Carragher, in Company History

You may have the best processes in the business. But, at the end of the day, people matter. The trust created between a client and the insurance advisor is at the heart of success.

It’s something you can’t fool with. If you mess up once–only once–your reputation dies. Even worse, you lose the pride and joy you enjoy by going to work every day.

Pride and joy! At work, you say! What an alien concept for someone deep in the morass of corporate politics or stymied by corporate silos. Pride and joy comes from a common vision. It can be very tough to be part of a company that is peopled with professionals who don’t have a common vision–or who lack a vision at all.

At Breckenridge we have pride and joy. When we formed this firm a little more than a year ago, we decided we would only associate with people of a common mind. We have walked away from acquisitions with people and organizations who don’t share our set of ethics or our culture. Indeed, we have walked away from multi-million dollar producers because we knew we just couldn’t mesh.

We like our clients and we like each other. We are working with transparency in an industry that is now backing off from those kinds of commitments. We are, in short, something of a different breed, and we like to think, a different level of professionalism.

Clients who demand a $300 bottle of wine probably don’t want to work with us. We’re looking for the kind of people who enjoy working through issues and solving tough problems. We seek people honestly excited about finding that different solution or the unique approach.

If you get charged up by your clients, challenged by the people you work with, and motivated by the process of finding meaningful solutions to risk, we are the right place for you.

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March
17
 
2011
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Will The Market Turn?

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By Jack Roberts, in Insurance

Will the soft market ever end? Don’t bet on it even with all the horrendous catastrophes of the last few weeks. The constant handwringing over the low prices in the property-casualty markets means that you would think that insurers and brokers have learned to live with it. Overcapacity, economic slowdowns and aggressive competition have stayed events during the past few years that, in the past, would have shot prices way up.  Fires, earthquakes, tsunamis, hurricanes, oil spills, and huge product liability judgments have only resulted in a short-term blip or two in prices. No broker or insurer can afford to ignore this trend and expect to survive, no less prosper.

The consensus among the “experts” today is that with the earthquake and tsunami, the reinsurance markets will turn.  But even with these events–and the earthquake in New Zealand–the market still has about $500 billion in surplus and reserves.  So the chance that this market-turning event will trickle down into the other markets is far from clear.  Program administrators and brokers that I’ve talked with say that unless the economy improves, exposures will continue to shrink and the current glut in capacity will remain.  That’s not the conditions needed to cause a hard market, although it may be closer to a bottom today than a year ago.

There are plenty of explanations about why prices don’t increase.  In the short term, the industry has benefited from redundant reserves which have been able to shore up earnings. And look at the economy in general–except for commodities, business has learned to live with low or no inflation and the inability to increase price. As an industry, we are much better at assessing risk today. We know exposures, probabilities and profitable pricing, as Warren Buffet just pointed out.  But we are victims, as he said, of  “testosterone-driven” CEOs who refuse to let up on their demands for increased premium volume–even if it means they know that premiums are inadequate for the risk.  So much for “underwriting discipline.”

Here at Breckenridge we see it in action all the time.  Even though the pressure to increase price is escalating with loss ratios moving up, there are some insurers out there–no names–which go to extraordinary lengths to underprice the competition to get new business–or keep accounts on the books.  The trend won’t go away.  So much for the argument that insurance execs will forgo revenues to insure ongoing profitability.  Even Buffet, who in the past suffered from some big losses in his insurance investments, saw insurance profits jump 38 percent and premium volumes rise by 10 percent.

Don’t ask us to speculate on when the market will turn–or whether it will turn. In a recent interview with SNL Insurance Daily, CEO Tracey Carragher said about the E&S markets: “Rates are not going to turn until the standard market starts hitting the wall. We are not waiting for a hard market. It is not in our plans, but it is in our prayers.”

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