As in prior years, Edwards Angell Palmer & Dodge LLP is live blogging from the PLUS D&O Symposium. There were several interesting points discussed during the fourth panel discussion, including the following:
- Underwriting is becoming an increasingly data-oriented business. That data, however, is still not being used as efficiently as it could be. This is especially true in the context of excess layers. Pricing excess layers at a percentage of underlying layers (i.e., 60% - 80% of the layer below) doesn't seem to be the right approach. Instead, pricing of excess layers needs to be a more thoughtful process based on the available data.
- A year or two after a significant industry event, the industry can go into heavy competition on pricing and terms. The industry needs to learn to better anticipate the next large event so that it doesn't act in dramatic fashion.
- Over the past 10-15 years, reinsurers have reduced their backstop from 75% to 25%.
- With rates at 50% of what they were, a single event can be catastrophic, which requires exercising underwriting discipline to overcome.
- Good underwriting requires being able to write in a changing business environment.
- The marketplace feels like '96/'97, but the difference is that insurers are not writing investment banking E&O or multi-year policies.