DENVER -- The combination of a storm season without a major catastrophe and investors taking a shine to the insurance industry may mean flat to possibly softer renewal rates for retailers negotiating coverage, according to a speaker at a recent CSP roundtable.
In the absence of major catastrophes, the insurance industry does well, said Stewart Van Duzer, first vice president and director of special accounts marketing for Federated Insurance, Owatonna, Minn. Speaking before about 50 suppliers and retailers gathered for CSP’s Leadership & Crisis Prevention Forum, Van Duzer said interest has picked up from private-equity firms for insurance companies, flooding them with investment dollars.
“My educated guess would be that rate levels for your purchases on your products will continue to be flat or go down in 2015-2016,” he said, referring to the climate as a “silent soft market.”
Larger accounts will benefit mostly, as insurance carriers with access to investment capital, are eager to build their businesses. “If you want to shop, you’ll probably find somebody who will give you something better. Companies have gotten their rate, and are already giving it back in certain markets.”
The downside has come with insurance companies and their own investment track records. “Their returns have been terrible,” Van Duzer said, qualifying his statement as being a general one. “It’s a drag on their earnings.”
Taking on other insurance topics, Van Duzer said rates on workmen’s compensation insurance will remain “dicey.” He said private investment money is still prevalent, but the Affordable Care Act (ACA), the new law requiring individuals to have insurance, still has to run its course.
Several issues come into play. For one thing, doctors squeezed by ACA may seek to make it up on the workmen’s comp side, he said. Secondly, new drugs and new treatments could arise in the future. While good for the patient, such options are typically costly.
Another topic Van Duzer covered was the insurance concerns behind legalizing recreational marijuana use. “Discussions are in its infancy, but it’s coming,” he said. “[My company is] not panicked about it because c-stores sell beer, wine and liquor—[marijuana] is just another drug.”
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.