The President’s Message: Spring 2022
While we can all agree that hope isn’t a plan, that won’t keep me from hoping that 2022 will treat us a little better than last year.
Weather events are increasing in frequency and severity, and what may have been considered an anomaly 10 years ago now appears to be the new normal. No longer can we discount “unusual” events (such as a derecho in December!) as so outside the norm as to warrant being removed from analysis.
As we have experienced these large-scale events, property values have risen and claims-related costs have reached all-time highs. While I’ll continue to hope for better luck, we will plan for a new normal. Here are some of the things we’re doing:
Improving Our Underwriting
As a reinsurer, the risks we write are businesses. So, what’s a good risk to a reinsurer? It’s a well-run operation. This is a broad statement, but it’s important that we look holistically at our risks since historical performance is only a piece of the reinsurance underwriting puzzle.
We’re looking for companies that are consistently reviewing their underwriting guidelines, auditing claims, inspecting properties, adjusting rates to keep up with increased costs and property values, and a company with a board that supports the manager. These factors all lead to an insurance company that is well prepared for the future.
Taking Action
When insureds are experiencing challenges, we offer to help them. This may be a rate study to show where action needs to be taken, a review of a company’s underwriting practices, a claims audit, or even help with succession planning or board education.
WRC’s Mutual Assistance team is dedicated to addressing these issues and providing guidance to our clients in improving their operations. There are times when our suggestions are not well received. We respect a company’s right to choose how to run their business.
Just like when any insured in any line of business takes on risky behavior, however, we have options to consider. We may choose to not renew a risk or we may change our rating or policy structure to address our concerns. It’s important to practice what we preach, even when it’s difficult.
New Leadership
In addition to taking a more disciplined approach to our underwriting of reinsurance risks, we selected a new leader for our subsidiary 1st Auto.
On April 4, we welcomed Ellie Walsh as Senior Vice President of 1st Auto. Ellie brings over 20 years of experience in personal and commercial insurance, along with a deep understanding of how to analyze a product line. We are excited to have Ellie join The WRC Group, as 1st Auto plays an important role for our reinsurance clients.
Having said that, we also must remember that 1st Auto is not a service, it’s an insurance company that needs to be able to support itself. This means applying the same rigor we ask of any client company – setting sound underwriting guidelines, reviewing rates to ensure profitability is factored in and reviewing the books of agents with poor loss trends. And just like with our reinsurance clients, if we can’t rehabilitate a poor book of business, we have options to reduce our risk.
These are just a few highlights of the actions we’re taking to improve our operating performance. We are also controlling expenses, both in projects and staffing levels, refining our budget process, and ensuring that when we do spend, we’re investing in initiatives that will make the greatest impact on our results.
We know we have challenges to overcome, and as anyone in insurance knows, we can’t foresee all the obstacles that Mother Nature will put in our path. But by focusing internally on the foundations of running a sound company, putting the right people in place, and acting on those things we can control, we’ll be better prepared for what comes next.