Risk Placement Services (RPS) President Joel Cavaness discusses the company’s acquisition strategy, the effects of El Niño and the Affordable Care Act on the insurance industry, cyber risk and more, during the recent NAPSLO Convention in San Diego.

Mr. Cavaness acknowledge the effects of the changing weather patterns on heat, flooding and the types of storm activity the U.S. is experiencing. Still, he believes the property insurance market is well-positioned to handle a major storm. He notes that the surplus lines market in particular is “always ready” for the impact of a storm. “It would take a major event to dynamically change our business right now.”

According to Mr. Cavaness, the Affordable Care Act has had two major impacts on the healthcare industry. Regarding Medical Malpractice liability, he sees many major hospital networks merging and buying institutions in order to increase/broaden distribution of services as the ACA limits fees. He also sees many doctor groups merging with larger firms in order to keep up with regulation and costs. These changes will tend to escalate healthcare costs driving loss costs in areas like Workers Compensation and General Liability upward.

Mr. Cavaness sees new cyber risks nearly every day. Risks can be difficult to assess because they can each be so different. He believes one trend that may help in risk assessment is the move toward outsourcing data collection, in effect laying the cyber risk off to companies equipped to store massive amounts of data. He believes the insurance industry is “coming to grips” with the risk, working with insureds especially when they have a breach.

Throughout RPS’ history, Mr. Cavaness says the company has done mergers and acquisitions. He sees mergers as mutually beneficial for RPS and the acquired company. It provides RPS with an opportunity to grow geographically and through product or market development. He says RPS has done about 45 mergers throughout its history. He expects RPS’ M&A strategy to continue, predicting the company will do a couple more before the end of 2015.

For more from the 2015 NAPSLO Convention, visit the WRIN.tv On Demand Library.

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