Alan Kaufman
Chairman & CEO
Burns & Wilcox

I do not anticipate that 2012 will be much different than 2011. The main reason is due to the overall U.S. economy. The world economy also has an effect. Rates will remain relatively flat, both in property and casualty, except for specific areas of the country where property rates may harden in small percentage points. I do not see rates weakening, due to the cost of reinsurance and some of the standard markets having difficulties with their loss experience in 2011. The personal-lines area in our segment of the specialty-insurance world in the latter half of 2012 will harden, with small percentage increases.

John Pagoumian
President
NAPCO

In order to get final approval [for premiums in excess of budget expectations], we expect more risk managers will need to bring alternative quotes to their senior management. If there's no change in submission quality or marketing strategy, it will be unrealistic for risk managers to deliver these alternative quotes, much less further reduction in premiums, without reducing critical coverage limits and increasing deductibles. [So] we expect to see significant opportunities in 2012 from agents and risk managers who have already had difficult renewal negotiations and don't need to be convinced that better submission quality and a fresh approach are required for optimal terms and pricing.

Wendy Houser
Managing Director of Wholesale Marketing
Markel Corp.

Markel is optimistic about the market opportunities in 2012. After six-plus years of declining premiums, we are seeing areas where premiums are, in fact, increasing. Our competition is pulling back, tightening forms, increasing rates or exiting the marketplace in a number of product lines. Markel has been growing throughout 2011—and in the last few months we have picked up the pace. We intend to capitalize on this trend in 2012.   

Joel D. Cavaness
President
Risk Placement Services Inc.

Market opportunities for the wholesale community will expand in 2012. The standard markets are feeling the pains of the last year, and they feel the pain from the pricing that has been occurring over the last five or six years with significant pricing pressures, especially in the casualty lines. Although it is a long way from being a hard market, we are seeing a dramatic increase in submission flow and a fair amount of increase in bound new business.

The challenge of a transitioning market is twofold. One is to manage the amount of marketing activities that will go on in this type of a market. Many accounts will simply be marketed because the retailer just does not know what to expect out of his incumbent market, so it is up to him to check the waters.

The second factor is dealing with people who know how to sell in a changing market. If you think back, it has been a long time since anyone has had to deliver an increase to a client. We have to be in a position to provide them market intelligence, be well out ahead of the expiration, and provide them with advance notice on market conditions and guidance on their particular account.

Gary Thompson
Executive Vice President and Chief Underwriting
Officer for Commercial Markets
The Hartford

We're targeting industries such as health care, technology, life sciences and private education, and we're continuously improving our specialized capabilities to help our agents and brokers capitalize on these market opportunities. The industry continues to be challenged by a series of headwinds, including slow economic growth, sustained high unemployment levels, investment yields near all-time lows, and more frequent and more severe natural catastrophes. However, we believe the pendulum has shifted and the market is clearly firming. We expect to see commercial P&C pricing continue to increase, and we will continue to drive for price increases in 2012.

Mario Vitale
President
Aspen U.S. Insurance

We don't foresee any new challenges at this time for 2012; however, there are many ongoing challenges that will continue into the new year, one of which is the excess capacity in the marketplace. Despite the firming we are seeing in the marketplace, the number-one factor keeping rates below adequacy is too-robust competition in some lines, with more than enough supply to meet marketplace needs. We are seeing a few outlying companies that seem to be more concerned with production than profit. Sooner rather than later, we believe they also will recognize the importance of returning to the basics of responsible underwriting and pricing in a very challenging and risky marketplace.

Robert Cubbin
CEO
Meadowbrook Insurance Group

For sustainable profits to re-emerge, prices need to go up. While we are seeing some bottoming out and even price hardening in certain specific product lines or market segments, we still do not foresee a turn in the market cycle in the near future. There is still a lot of capacity and strong competition present in the market. Given the existing excess capacity available in the market—[combined with] fierce competition, low yields on fixed-income portfolios and tough economic conditions—profits will continue to be a struggle to achieve consistently. A lot in 2012 will depend on the weather.

Garrett Koehn
President
Crump Northwestern U.S.

In the area of professional liability or FinPro lines, we expect to see continued general softness in the overall market due to excessive capacity—with some signs of the market stabilizing overall.

Categorically, markets are adjusting to more recent experience. We see some hardening, for example, in the private directors-and-officers area, with some key carriers hoping to broadly raise rates in 2012 (in spite of this abundance of capacity). We expect the miscellaneous errors-and-omissions areas to remain relatively stable, with growth opportunities in the cyber-liability and privacy areas as more buyers appreciate the need for these coverages.

Jeremy Johnson
Product Line Executive for Specialty Lines (U.S. and Canada Region)
Chartis

Specifically, we believe there are continued opportunities in environmental liability, corporate aviation and cyber liability, and we see a heightened interest in the development of solutions to address multinational exposures, whether driven by risk-management, tax or regulatory concerns. Underwriters need to be able to differentiate their product, drawing attention to coverage, service, claims handling and market commitment. There remains an abundance of competition, with many [carriers] looking to build market share at the expense of profit; the temptation to allow the insurance products to be commoditized along price lines must be resisted.

Marik Brockman
Principal Insurance Sector
PwC U.S.

Critical to top- and bottom-line growth is the ability to leverage the wealth of customer data to identify and promote products and services that match a customer's specific profile during any channel interaction. This lowers search and acquisition costs and increases awareness, products per customer and long-term loyalty.

Product, service and channel innovation represent key opportunities in 2012. Creating separation from competitors, as economies recover, begins with investment in strategic-growth initiatives during down times. Emerging or growing risk types, such as digital security, online reputation or business continuity, represent the potential to carve out new products and services. Developing partnerships with other service providers and retailers to reach high-value customers—and developing joint or integrated products and services—represent new channels for growth.

Ken Goldstein
Vice President, Specialty Insurance
Chubb Group of Insurance Cos.

Every company that collects, stores and/or transmits private information, such as an individual's name along with a Social Security number, employment information, health information or debit/credit card information, is subject to state notice regulations. Some companies may also be subject to federal compliance regulations. This creates a significant market opportunity for agents and brokers in the cyber-security space to assist companies with loss-mitigation tips and risk-transfer solutions.

In the current economic environment, a number of small to midsize companies will find it challenging to allocate the appropriate IT dollars needed to help defend the business against unauthorized access. Consequently, these companies will continue to be significant targets for global hackers, and may find it hard to purchase cyber-liability coverage [without being subject to] aggressive terms and conditions.

Joseph J. Beneducci
Chairman, President & CEO
ProSight Specialty Insurance Holdings

Technology will continue to play an increasing role in satisfying customer needs. I'm not talking about the technology we use to rate and issue policies. While that's definitely important, too, I'm talking about the use of technology and data-mining techniques to better understand customer behaviors, needs and buying trends.

The new breed of successful specialty-insurance provider isn't simply waiting for new submissions to show up in their inbox, but rather is proactively learning and improving their offerings based on the evolving needs of their customer base. Specialty carriers and producers will find it increasingly difficult, if not impossible, to successfully improve and distinguish their value proposition without a more sophisticated use of technology and data-mining.

Greg Bangs
Vice President and Crime, Kidnap/Ransom and Extortion, and Workplace Violence Expense Product Manager
Chubb Group of Insurance Cos.

The key challenge in 2012 will be the continuing worldwide economic downturn. This has contributed to an upsurge in claims severity as companies monitor their finances and operations more closely and uncover previously overlooked losses, such as employee theft of funds, property or pension-fund assets.

Employees who are under severe personal financial pressure are more likely to steal, especially if they are concerned about losing their jobs. This increased motivation to commit dishonest acts is exacerbated by increased opportunity to do so, due to company cutbacks in internal audit and other internal control functions due to the poor economy. Small and midsize companies will be disproportionately victimized, as their internal fraud controls are often weaker than those in larger organizations. 

Rick Ciullo
COO
Chubb Surety

We continue to operate in a sluggish economy and an environment with more risk. As a result, contractors are generally smaller businesses than they were a few years ago. Their demand for bonds and the premiums they pay is down. For agents and brokers who play in this space, the challenge is easy to see: more competition, downward pressure on pricing and generally higher risk.

The opportunity is harder to see and may take a few more years to play out. Agents and brokers know that their surety customers need them now more than ever for sound advice. But customers also need surety capacity that is stable and predictable. This recession will not last forever. The better contractors will survive to enjoy the recovery; they'll need surety capacity to execute their business plan. Now is a good time to build more and deeper relationships with customers and prospects, and to match them up with surety underwriters who can support their long-term needs.

Wayne H. Carter III
Executive Vice President
Crump Professional Programs

The most significant challenge for 2012 will be the effective deployment of the still-abundant surplus within the P&C industry. There is a significant body of expertise with access to capital whose investors are looking for a return. The return can only be realized if the capital is deployed.

Depending on the perceived pressure to deploy that capital, some of that expertise will likely take more risky positions than they would normally view as prudent. Those activities will continue to keep a lid on price increases throughout the industry. While some pricing discipline is returning to the market, responsible risk-bearers who know they need rate will have a difficult time achieving the levels they desire.

From an overall market standpoint, technology will play a major role in enhancing efficiency and time-service standards over the next couple of years. Our industry has been very slow to embrace the effective use of technology, but we are starting to see some traction in the development of electronic exchanges for the smaller, run-of-the-mill risks. Those who are quickest to harness effective use of these delivery systems will be the long-term winners in handling this vast market segment.