Last updated on May 13th, 2019 at 02:22 pm
Insurance expert, new to the area, sees hard market easing in two years
William Paul has been in the insurance industry for 17 years, and he’s got some good news for business owners being squeezed by insurance premium increases from every direction.
"The hard market is not going to be here for much longer," Paul said. "I’d say another two years, max."
Paul is the Milwaukee sales leader for Marsh, one of the world’s largest insurance brokers in the world. He notes that others in the industry may predict the hard market in property and casualty insurance to last for up to five more years, but he thinks there is too much over-capacity in the market right now.
The insurance industry goes in cycles, he said, and for 10 years the P&C sector was a soft market where customers were getting extremely competitive premiums. But the market was getting hard even before Sept. 11. And while the terrorist attacks exasperated the market a little, for all the wailing and gnashing of teeth that the industry did post-Sept.11, the total losses of around $50 billion didn’t hurt the industry at all.
"It didn’t put any of us out of the business," Paul said of Sept.11. "There’s an over capacity, and even today you can find coverage and build limits in just about every industry. It’s just going to cost you more. But with the over capacity there, insurance companies are going to have to start fighting for premium dollars.
"Give it another two years and premiums are going to get soft again."
Besides escalating premium costs, one of the biggest issues facing the industry is toxic mold. Most builders, developers, contractors and others with large real estate holdings have difficulty getting coverage because it’s being excluded from regular policies. But, he notes, that provides the insurance industry with a golden opportunity. A lot of specialty carriers are coming out with mold coverages.
"There’s this hysteria about it – everyone’s claiming they have it," Paul said.
And unlike polluted properties where property owners can have plumes of pollution cleaned up to acceptable federal or state levels, there are no such standards established for toxic mold. That’s the next step in resolving the mold issue for the insurance industry.
Another concern within the industry is how to address future terrorist attacks. Again, most policies exclude losses from terrorism from coverage, but there is specialized insurance to cover losses from terrorist attacks. It’s just that it won’t come cheap. And, he warns, make sure you understand the definition of terrorism.
"Some (policies) include ‘civil commotion’ as terrorism, Paul explains. "For instance, during one of the Harley-Davidson rallies, a riot happens outside of your building and your building is destroyed, that could be excluded under the definition of some terrorism wordings. So if you’re going to have it, understand exactly what is excluded and fight hard to have it exclude only terrorism or war."
If neither terrorism nor mold is of concern to you, Paul still advises that business owners start early when getting bids on their P&C insurance. Companies seeking coverage are swamping insurance underwriters, so research which companies may specialize in your industry and specifically target those companies.
And when submitting information to the companies, make sure it is comprehensive, that you know the company’s risk and loss history and involve the company’s top management in the process.
"Underwriters today are only going to look at accounts where the information is precise, concise, succinct and updated," Paul says. Again, begin the process early because what used to take 30-60 days can take 120-150 days because of the deluge of companies going out for bid.
Paul, while not new to either Marsh nor the insurance industry, is new to Milwaukee since January. He transferred from Marsh’s Pittsburgh office and likes what he sees.
"I like it a lot," he says of Milwaukee. "It’s very similar to Pittsburgh. It’s a small town with some big town availabilities – nice communities, close, hard-working people, blue-collar neighborhoods, ethnic neighborhoods. It’s great."
TITLE: Sales leader – Marsh Milwaukee
College: Denison University, Granville, Ohio
GREW UP: Long Island, N.Y.
TRANSFERRED FROM: Marsh’s Pittsburgh office; still looking for a house in southeastern Wisconsin
FAMILY: Wife, Susan; two boys, ages 5 and 3.
THOUGHTS ON MILWAUKEE: "I like it a lot. … It’s a small town with some big town availabilities – nice communities, close, hard-working people, blue-collar neighborhoods, ethnic neighborhoods. It’s great."
July 5, 2002 Small Business Times, Milwaukee