Specialty insurers now account for 56% of market in premium
The property-casualty insurance market has moved to a greater degree of specialization, says Conning Inc. in a new study entitled “2016: Specialty Insurance – Survival of the Fittest“. The study is the first that Conning has done on specialists and specialty markets since 2011.
The study reviews the commonly defined specialty markets and insurers and then goes on to explore the performance differences between the specialists and the rest of the market. Included is a look at the characteristics of specialists, and the outlook for the specialty insurer.
Overall, evidence suggesting that specialty insurers have outperformed in the marketplace lies with these carriers’ exceptional premium growth in the last five years. According to the report, the premium writing for specialty insurance companies has grown from forty (40%) percent of the market in 2011, to today where specialized carriers write fifty-six (56%) percent of the total property and casualty insurance market equal to $315 billion in direct written premiums.
Specialty marketplace includes three broad categories of carriers catering to specific risks
The report groups the specialty insurer marketplace into three categories: product specific specialists such as workers’ compensation or medical professional liability carriers; high-risk specialists, such as excess and surplus lines insurers, catastrophe-exposed homeowner insurers and nonstandard auto writers; and “customer niche specialists,” such as those serving farm bureau members and other defined customer groups.
As per the accompanying chart the product specific carriers write forty-four (44%) percent of the specialty market, while high risk carriers write thirty-seven (37%) percent and defined customer groups such AAA write the remaining nineteen (19%) percent.
Survey found 1500 carriers that have a specialty market strategy
“We identified over 1,500 individual companies that have fully embraced specialty strategies as a primary approach to the marketplace and are responsible for more than half of the industry’s premium,” said Robert Farnam, Vice President, Insurance Research at Conning. “While a specialty strategy is no guarantee of success by itself, specialty insurers as a group outgrow and outperform generalists. Specialized knowledge and superior underwriting have also placed specialty insurers and their teams in high demand as companies look to grow organically and through acquisitions.”
Specialty Insurance: Survival of the Fittest
“Specialty Insurance: Survival of the Fittest” analyzes the performance of specialist property-casualty insurers over a ten-year period. Included within the review are high-risk specialists, product specialists and customer niche specialists. The study reviews key characteristics of successful specialist companies, and offers case studies to highlight specialist success stories and cautionary tales.
“The specialist strategy is focused on developing and sustaining enduring competitive advantage, and different approaches will of course yield different results,” said Steve Webersen, Head of Insurance Research at Conning. “In this review of property-casualty specialist insurer performance, we analyzed high-risk specialists, product specialists, and those firms pursuing a customer niche strategy. In this increasingly crowded market, there were many variations on these strategies, but the more successful companies were those that developed and deployed their superior market knowledge and maintained focus on their specialty strategy above growth concerns.”
The “Specialty Insurance: Survival of the Fittest” study costs $1,750.00 and is available for purchase from Conning by calling (888) 707-1177 or by visiting the company’s web site at www.conningresearch.com.