So here we are with the first two quarters of the new millennium year behind us and still little sign of happiness ahead for Property and Casualty insurers despite much talk of hardening markets. Rumours persist that the big re-insurers are starting to toughen their approach, Lloyd's are no longer considering reductions and the leading American companies are looking for 20% rate increases. But little of this has found it's way down to the trenches - yet.

The instant communications world is on us with all it's benefits and disadvantages, some humorous and some frustrating. Websites attract some of each and ours attracted one hopeful soul who intended to borrow $500,000,000 and place coverage for any losses that might be incurred by investing this tidy sum!

And then of course we have that wonderful modern trend, the automatic telephone answering service. At one time it used to be possible to phone an office and ask to speak to someone who worked there. But no longer. Now, unless you know their extension number, the first three letters of their last name converted to numerals, and their social security number, it is very unlikely that you will be able to make contact. And if you do there is the dreaded response ".........you have reached the desk of............".
When you think of it, this is a very puzzling approach given the fact that your impression of a firm is distinctly affected by the first response you receive.

And so what of the future? Evidently the giant financial groups will continue to amalgamate with the hope that if they control enough business they will be able to influence rating levels and thus their return on equity. There is no doubt that there is going to be a dramatic change, after all if the Chase Manhattan Bank can report, as it did recently, a 24% return on equity, why, if you ran a large financial group, would you persist with an insurance division which has considerable difficulty achieving even a 5% return. The Economist even went so far as to suggest that insurance company shareholders would best be served by having their equity in the company returned to them in the form of cash, a most intriguing approach to solving the problem of over-capacity.

We will see the rating manual classes such as auto, personal lines and small commercial lines drift more and more into the sphere of direct selling, mostly on the Internet. As distinct from the past where most leading companies had knowledgeable underwriting staff at the branch office level for the more complex commercial risks, they will be concentrated more and more in special risk divisions at head offices. This, combined with the shrinking number of companies due to mergers, would mean a dramatic decline in the number of markets available to brokers. But as with most financial market voids they don't last long and we can expect the resurrection of that venerable institution, the Managing General Agent. In North America we already have many examples but increasingly, as risks become more complex, we will see M.G.A's attracting the brightest and the best brains to run large capacity underwriting pools for those companies who, perhaps due to size or inclination, do not want to establish their own special risk divisions.

Our interesting risks catalogue since our last website commentary include: