Outrunning the Elephants The soft market has carriers looking twice at business they once ignored.


You have a $1,000 account and there are not as many going after that one.


Glenn Clark, Rockwood Programs and Target Markets Founder


The soft market for insurance pricing may be hampering program administrators looking to expand their programs or launch new initiatives and raising the range of competition. Standard writers are more willing to consider less-traditional areas of coverage, and may be more motivated to compete for lower amounts of premium or smaller accounts.


Glenn Clark believes the surge of competition from standard writers is likely transient, but it’s still enough to affect the market for companies like his. He describes the fi ckle nature of standard writers entering specialty markets as “last in, fi rst out.”


Clark’s response is to seek out areas where people have not considered coverage before, such as errors and omissions for specialized sectors. He’s also willing to pursue lower-premium coverages, targeting sectors that are largely off the radar of many carriers.


“If you have a six-fi gure account, you can have eight, 10 carriers going after it,” Clark said. “You have a $1,000 account and there are not as many going after that one.”


Carriers may be willing to write unprofi table business for the sake of volume but program administrators can never afford to compete on unprofi table terms, Richard Augustyn said.


“We live and die on our loss experience. I’m not going to write a risk that’s too cheap,” Augustyn said. “I would not be doing my carrier any favors to do that kind of a thing, so a soft market hurts a program administrator.”


Copyright © 2010 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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