Steve Crim is a founding partner of C&S Specialty Underwriters, specializing in commercial casualty risks. He speaks with about the causes and impact of prolonged soft market conditions on the insurance industry.

Mr. Crim says the soft market, caused by excess capital in the insurance system is putting pressure on insurance rates, negatively impacting underwriting margins. He believes “most underwriting profits we see today are more the result of reserve takedowns from prior years than the current accident year result. That’s a little scary….Today’s underwriting results are not what they appear on paper.” Historic low interest rates also hurt investment income. “There is no way out for insurance companies, and no way forward.”

Mr. Crim does not see a single loss event putting a dent in the soft market. Even a “9/11 event would not take enough capital out of the system to have a material impact on insurance rates.” He believes changes in the soft market will depend more on the economy (growth and jobs) than a catastrophic event to change course.

According to Mr. Crim , smaller insurers are vulnerable in a soft market because they have higher expense ratios and not as mush premium to cover them. To survive the soft market without scale, smaller companies need to focus on operational efficiency, including processes and systems, particularly new web-based technologies now available. It can give them a competitive advantage.

For more from the 2015 NRRA Conference, visit the On Demand Library.

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