NEW YORK—Consensus among panelists speaking at Advisen’s Property Insights Conference in New York was that a major catastrophe event, the likes of Hurricane Katrina, would not alone be enough to end the current soft market.
The opinion was shared by various panelists speaking throughout the June 8 conference.
“It’s been a soft market for a long time, five years by most measures,” said Michael Nardiello, senior vice president – property leader, Sompo International, speaking on the Global Property Market Trends panel.
One factor driving down rates is the abundance of capital flooding the market.
“Market surplus is at an all-time high, pushing $700 billion,” Nardiello explained. “Is the market able to sustain, or are the balance sheets able to sustain, a big catastrophe and turn a profit? In the short term probably not, but it is a well-capitalized industry so it’s not something that’s going to change the market.”
Steve Truono, executive director, global risk & insurance management, at Avon Products, Inc., speaking on The Risk Manager’s Perspective panel had a similar view. “I personally don’t think a Katrina like event is going to move the market today,” he explained.
Truono said that if the market changes it’s going to be a result of a combination of events. “It’s going to be capital starts becoming thinner, a Katrina type event, coupled with ongoing consolidation within the market. I think then you have a perfect storm to start impacting pricing,” said Truono.