The CEO of MarketScout says Berkshire Hathaway's hiring of four seasoned executives away from American International Group could disrupt commercial market rate increases should the company decide to enter the primary marketplace to expand its market share.
In this month's release of the online insurance exchanges' market barometer, CEO Richard Kerr says Berkshire could affect the steady rate of increase the P&C industry has enjoyed if it plans “to enter the primary property and casualty market in a meaningful way.”
He cautions that his views are speculative, but he notes that rumors point to Berkshire possibly launching “a new multi-line admitted underwriting company.”
But Kerr also says that historically, Berkshire has proven to be a very sound underwriter and “it is doubtful they will price their products inappropriately.”
Both Berkshire and AIG have very talented stable of people, and whatever direction the companies choose, “the end result will be positive for insurance buyers, brokers and agents,” says Kerr
For Berkshire's part, in reporting its 2013 first quarter results, the insurer notes that in at least two of its insurance companies, it has the capacity to increase underwriting, but only if market conditions improve.
Turning to the commercial rate barometer, MarketScout says that for the month of April, overall P&C rates rose 5 percent, the same as the previous month. Commercial property and workers' compensation were up the most at 6 percent. By premium account size, jumbo accounts—over $1 million in premium—experienced the largest adjustment, going from increases of 5 percent in March to 3 percent in April.
All business classes showed upward momentum with Employment Practices Liability Insurance and Surety having the lowest increase at 2 percent.
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