When the market turns, we need to be
ready. That means horading away the nuts now.
Call someone in our industry concerning placement and
you’ll get a response about market conditions. The
genesis of your inquiry could be coverage, and the answer would
be the same. Question: “What’s our tee time
Saturday?” Response: “market conditions.” The
conversation is unavoidable, as it should be.
My discussions with several wholesalers have produced quite
a, dare I say, “colorful” dissertation or two on
the marketplace. Most cannot be repeated in print, to both
preserve journalist decency and protect the innocent. I was
able, however, to gather some morsels from members descriptive
of their feelings concerning you-know-what, as well as a few
areas that—despite industry-wide downs—appear to be
“In hard markets, you spend more time with
underwriters. In soft markets, you spend more time with
retailers. As wholesalers, we have to find the position where
we treat both sides equally,” says Denis Brady, president
and CEO of American E&S, a general lines wholesaler in San
Francisco that serves 1,000 retailers through 10 offices
nationally. AES, a subsidiary of Wells Fargo Insurance
Services, generates $35 million in revenue.
Brady described the depressed construction market in
California, sparing none of the gory details of its effect on
insurers. When I asked him what, if any, product or coverage
seemed to be growing, the tone of the conversation changed.
“One area is intellectual property,” he said. With
fewer issues warranting more litigation, adequately insuring
for potential IP violation has become big business. Even as
markets soften, Brady says, AES continues to experience growth
in programs addressing this exposure.
Brady shifts to oil and gas cover and discusses a program
that, despite market conditions, has been very
successful—a program that serves the growing need of oil
and gas companies to deal with well blowout. AES has the
facilities to manage and underwrite this program but also goes
to the open market for these risks. Discussions of increased
drilling and other measures seem to have piqued interest in
this area, he says.
When it comes to talking about growing areas, he
wasn’t finished. In the race, age always wins, and an
aging America needs help.
“With the increased number of assisted living
facilities appearing to serve the needs of a huge retiring
generation, professional liability needs are growing. We
recognized that need and put together a program in London and
are marketing it nationally.”
This program, constructed less than a year ago in a stagnant
market, remains prosperous—another example of growth in a
Agriculture is growing (excuse the pun) like mad. Loti
Woods, co-CEO of McAuley Woods and Associates, says adverse
market conditions aren’t affecting this segment of the
portfolio. “Agriculture is a class that can scare
standard carriers, particularly with the transportation risk.
Property can also be an issue,” she says. “Many of
the buildings are older with little fire protection.”
Risks commonly include outdoor buildings with conveyor belts
and other features that typically don’t fit (even hungry)
standard market models.
With its base in Palm Beach, Fla., McAuley Woods deals
largely with coastal risks, driving it even further from the
Sure, profitable product lines are out there, but how does
one learn the best way to survive a soft market? Answer: Ask
someone who’s been through one…or six. “My
first experience with a soft market was the one that happened
after [Hurricane] Betsy; it hit reinsurers really hard,”
says Jerry Sullivan, chairman of Los Angeles-based Gerald J.
Sullivan & Associates, the center of The Sullivan Group.
“This is my sixth soft market, and I can tell you: there
is life after the soft market.” He attributes the
firm’s perseverance to what he calls the “Squirrel
“When the market turns, we need to be ready. That
means hoarding away the nuts now.” The
“nuts,” he says, include people, pricing and
acquisition. “The longer this goes on, the tougher it
gets on distributors. More good people become available;
pricing for agencies and books of business become more