There is near universal agreement that carriers are achieving rate increases for property and casualty business, but analysts and company and brokerage executives struggle to say what can be expected over the long term as the industry appears to be in new territory from a pricing cycle standpoint.
J. Patrick Gallagher, president and CEO of brokerage Arthur J. Gallagher, said at yesterday's Keefe, Bruyette & Woods Insurance Conference in New York that the current rate environment is unique relative to the prior three market cycles he has seen. Rates are beginning to firm, he notes, but the industry is not seeing the “spike recovery” in rates typical of a hard-market turn.
In fact, Gallagher said he believes there will not be a classic hard market in this cycle, and he believes that is a good thing. Typical hard markets, he explained, are marked by short-lived radical rate increases, a lack of coverage availability, and a rush to surplus lines for some risks. Now, the industry is instead seeing moderate increases, continued coverage availability, and and orderly shift of some risks to the surplus-lines market.
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