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Brokers relying on more granular data in challenging property market: AmWINS

3rd July 2018 - Author: Matt Sheehan

Property market brokers are increasingly relying on more granular data and risk models to obtain better results as 2018’s underwhelming pricing environment looks set to extend into the second half of the year, according to specialty insurer AmWINS.

AmWINS logoA report by the company observed that advanced risk modelling was leading to greater underwriting sophistication and pricing precision, supporting a more level and stable market and minimising the need for drastic corrections.

Harry Tucker, National Property Practice Leader at AmWINS, explained: “The better, more detailed exposure data we can provide to carriers, the better we can negotiate terms. Brokers used to think that it was better to provide less information about a risk.  Now, with modeling playing such a large role and defaulting to worse case when information is left out, we have found it best to be as granular as possible to obtain optimal results.”

There are exceptions to the prevailing market conditions, with AmWINS noting that catastrophe-exposed and frame habitational, woodworking-related businesses, dealer open-lot, cat-exposed hospitality and accounts with consistently poor loss experience can expect a tighter market

This tightening is a result of carriers recognising that loss expectancy is much higher than prior expectations for the class, but even among more challenging sectors, AmWINS maintained that brokers can find better deals for clients by providing quality submissions to underwriters.

AmWINS attributed continued competitiveness in the property market to an abundance of capacity, observing that risk appetites have remained high in the capital markets.

“In spite of the historic catastrophe season of 2017, the market has remained stable. Alternative capital continues to enter the market at an increasing pace,” said Tucker.

Industry surplus reached an all time high of $719.4 billion at the end of 2017, with alternative capital rising 17% to $88 billion and accounting for 12% of total industry surplus.

Looking forward, AmWINS said it expects the overall current conditions in the property market to continue, with increased alternative risk appetite and traditional carrier surplus likely to produce a stable market.

It also forecast greater dependence on risk modelling due to the value of accurate account data, and predicted that poor performing accounts and classes would continue to feel increased upward rate pressure.

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