The property market remains challenging in 2021. How are agents, wholesalers, and markets dealing with the hard market? We discuss a wide range of issues surrounding the difficult Property market.
Featuring:
David Pagoumian is the President of the CRC Red Bank, NJ office. David specializes in property placements and is an active member of the Property Practice Advisory Committee.
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Do you want to take your career to the next level? Join #TeamCRC to get access to best-in-class tools, data, exclusive programs, and more! Send your resume to resumes@crcgroup.com today!
The property market remains challenging in 2021. How are agents, wholesalers, and markets dealing with the hard market? We discuss a wide range of issues surrounding the difficult Property market.
Featuring:
David Pagoumian is the President of the CRC Red Bank, NJ office. David specializes in property placements and is an active member of the Property Practice Advisory Committee.
Subscribe to Tools & Intel (email newsletter)
Read Past Tools & Intel Articles
Follow CRC Group on LinkedIn
Visit REDYIndex.com for critical pricing analysis and a snapshot of the marketplace.
Do you want to take your career to the next level? Join #TeamCRC to get access to best-in-class tools, data, exclusive programs, and more! Send your resume to resumes@crcgroup.com today!
[00:00:25] Dan Wentz: [00:00:25] Okay. So we're joined today by David , who is, uh, from red bank. Jersey the CRC red bank office, a member of the property advisory group and, uh, the office president there in red bank. Always a great contributor for us and very knowledgeable. Thanks for joining us today, David.
[00:00:41] We appreciate it.
[00:00:42] David Pagoumian: [00:00:42] Thanks for having me, Dan. Today,
[00:00:44] Dan Wentz: [00:00:44] we're talking about the hard market. Uh, there's agents are dealing with some, some, some challenges on pricing on capacity on everything today. And we wanted to pick David's brain and get some more information about that. David, the first question I have for you is what are you seeing with your agents right now?
[00:01:02] What challenges are they having specifically in property with this hard market?
[00:01:08] David Pagoumian: [00:01:08] Yeah, sure thing, Dan, um, I think, uh, we would all agree that we're running out of words to say for the time that we're living, you know, a hard market is one thing, but, you know, uh, put COVID-19 right on top of it. And that's a whole nother thing.
[00:01:24] You know, you're talking about a shift in customer behaviors and expectations that have been brought upon us, uh, during these times. And we've all been, we've all been forced to. Uh, you know, uh, you know, compromise and, and, and, and, and sort of be flexible in the way that we work. Uh, so all of those dynamics, uh, you know, are making all of us stressed out about the challenges that we're all facing.
[00:01:51] So what, what I'm seeing, um, there's, there's different, uh, sort of, uh, uh, generations of producers, right? You've got the producer, that's probably five, 10 years from retirement and has seen plenty hard markets. And, you know, has been here before, and then you have some of these really smart, you know, growing producers that have been in the business for probably a decade.
[00:02:15] And this is actually while it's a very big challenge for them. It's a great opportunity for them, if they can get through this, uh, you know, and, and come out the other end. Um, and so what I'm seeing a lot of our producers do, you know, at CRC, um, you know, we, we try to understand the retailers. Pressures and demands, right?
[00:02:37] You have clients that are constantly being cold, cold by different retailers saying that they have the next best, uh, you know, pricing and coverage and what have you. So it's constant communication, right? So if you know, you have a difficult renewal coming up, you have to share the bad news fast, and then there's the way in how you share it.
[00:02:58] What's the plan? What are we going to do to initiate a plan B a plan C and a plan D. Uh, all hands on deck now, more than ever using the tools and the analytics that we have to help our clients calculate risk to help them, uh, identify companies, appetites, emerging markets, getting on conference calls, having virtual on the writing meetings, saying that, yes, it is tough out there, but we've got this plan and that's so critical right now to make that connection.
[00:03:30] If you're not somebody else, who's saying the things that the client wants to hear is going to take the business away. Yeah.
[00:03:38] Dan Wentz: [00:03:38] So it's, it's a good time to really, uh, up your customer service. It sounds
[00:03:42] David Pagoumian: [00:03:42] like. Yeah. I mean, look, it's, it's great having customers, right? It's a compliment. It's a challenge. It's a compliment because they have choices and it's a challenge because we have to keep meeting and exceeding their expectations.
[00:03:53] I mean, each client has a rippling effect with regards to COVID-19, whether you're in the restaurant business. Or hospitality business or real estate business, everyone shaken and stirred from this. You know, I I'll give you a perfect, for instance, I had a account for about 10 years. It was a habitational deal, you know, annual meetings with the client.
[00:04:11] What have you there? Uh, GL went up tremendously and I was able to deliver a 5% rate increase on a Hab deal with a $25,000 deductible, long story short because their GL went up so much. Okay. They were forced to look at all lines of insurance. And so they were able to find a replacement for the property placement on a shed limits program.
[00:04:36] Uh, and most of the time, a lot of clients. You know, would think twice about a shared limits program, but when your GL is going up, your Eno is going up. This is going up, everything's going up. You know, you, you, you make exceptions and you know, who would have thought a 5% rate increase. It actually was a 7.2% rate increase.
[00:04:57] I think I was embellishing a little bit, but it's 72% rate increase on a 25,000 AOP deductible on a older Hab. You know, certainly we felt we did a great job, but unfortunately the market thought differently, the pressures that are happening on different lines of coverage, they're going to creep over to the property side because they're going to be looking at us and vice versa to try to bring in some savings or to insulate the pricing increase.
[00:05:29] Dan Wentz: [00:05:29] So as a wholesale broker, this is a great time to get creative and find even better solutions, you know, really prove your value to your clients. And I would think too, do you, do you think that, uh, you know, you're, if you're able to solidify that relationship right now during the most difficult time. Uh, that when you come out of this, you're going to have a better relationship forever, because they're going to realize what you did for them right now during the hard market, right?
[00:05:57] Yeah, no
[00:05:57] David Pagoumian: [00:05:57] doubt. Uh, you know, um, yeah. Customers tend to navigate towards, uh, you know, professionals, get that, get the job done, right. And, uh, that get the job done. And that also bring value to the table, whether it's helping them to qualify, you know, quantify their risk. You know, this is where, you know, now more than ever, we have to help them to, to make decisions on.
[00:06:20] Should you buy that limit? Should you look at this deductible? And really give some professional guidance and, and properly documenting all of that. But yeah, I mean, you know that saying, you know what doesn't kill you makes you stronger as is absolutely true for our business. Like any other aspect of life.
[00:06:38] Dan Wentz: [00:06:38] So let's talk about the different perspective. So right now, what is a, you know, you're an a, a retail insurance agent you're dealing with your buyer. How are they viewing this? They're they're viewing this as, Oh my gosh. My prices are going up right.
[00:06:52] David Pagoumian: [00:06:52] Not only that they're getting a call from competitors saying, Hey, prices are going up.
[00:06:56] Has anybody spoken to you about it? And if you're retail and you didn't catch up to them on that, you're going to be caught. And so I find that most of the retail brokers that we work with okay, are very professional and that dare, you know, providing the up-to-date market Intel to their customers. Uh, but even if you're doing a great job, just having another customer or just having your customer get another phone call from a competitor to try to get in the door is stressful because the stress of having to get the program done at the best rate increase is one thing.
[00:07:33] Add to that, you know, competition, that's breathing down your neck. Now you could argue that that's. Made in the USA, right? That's our, that's our system. And that's how that, that's what makes us innovative, competitive. And that's great. And, and, and, and it's fine. I mean, you know, there's a sport in that.
[00:07:52] However, if, if, as a retail broker, you know, that's why a lot of times our, our brokers at CRC, we're always providing them the state of the market updates. Uh, we're asking them to join in, on meetings would on the writers. Uh, we're having them look at their data and starting a data campaign. One way to really get a client embraced into your, you know, your, your fabric is to say, Hey, let's start a data campaign on secondary characteristics for convective storm.
[00:08:25] Uh, you know, not many other brokers are talking about language. And so if you're talking about doing things that are sort of out in the frontier, You're going to be able to hold on to that broker because there's not going to be much that they're going to hear from somebody else. That they've already heard from you.
[00:08:41] So our brokers that seriously are providing that sort of, you know, uh, cadence, if you will, uh, in the process
[00:08:50] Dan Wentz: [00:08:50] for sure. So yes, definitely lean on CRC group for those, you know, that, those tools, those resources, and also make sure you're increasing your communication and make sure that customer service is, is the best it's ever been.
[00:09:02] Really? What about from a carrier perspective? How are carriers viewing this? I had someone the other day say that. Underwriters are, are not philanthropists. And I thought that was the, a great saying, does that hold true in property? And what are you hearing from your carriers and how they're viewing the hard marks?
[00:09:18] David Pagoumian: [00:09:18] Yeah, I mean, you know, I, I grew up in the business when you, you made an underwriting profit by investing your money well, right. And, uh, it didn't have it there, you know, and, and of course I'm embellishing a little bit, but you know, you know, it was more, you know, what can I get on my yield, uh, of my investments.
[00:09:37] So, you know, put simply the underwriting discipline in today's environment is far superior. Uh, there's a lot of different checks and balances. Those are putting demands and pressures on our underwriters. Uh, not only that their bandwidth of submission activity is through the roof as is ours. So what's a good opportunity.
[00:09:58] What's not a good opportunity, you know? What does the retailer expect of us? Do they expect us to run into 20, 30 markets, clogged up clearance systems? And what have you, in some cases we have to do that. And that's just part of our service. And that's why insurance companies have robust clearance systems today.
[00:10:18] But aside from that, what can we do? Right? What we can do is we can use our data. So it wouldn't be, uh, you know, uh, uncommon of, of our CRC brokers to tell that client that, Hey, instead of running into the entire marketplace, we're going to provide you with, uh, sort of a sophisticated marketing summary using our ready platform, uh, and using the tools that we have on deals that are very similar, that we've placed in the last 90 days, one year.
[00:10:50] What have you. And you'll see that out of all of those possibilities. Our best rate for that account profile is roughly 22 cents. We'll package that up into nice documentation with visuals, and we hope that that will provide, uh, your customer, uh, a confidence that you did your due diligence. Now, alternatively.
[00:11:15] That message to the young, the writers is, Hey, look at what we did. We didn't waste your time. And I think that's, what's really special. That's happening at this company that I work for CRC that we're we're, we're, we're thinking of our underwriting partners and we'll, we're conscientious of their time so that they can spend their time and energy on the stuff that really needs attention.
[00:11:40] Yeah, it
[00:11:40] Dan Wentz: [00:11:40] sounds like underwriters are more likely to pay more attention to the CRC group submission based on the fact that you guys are filtering them out and sending them stuff that they. One I see, right. Um,
[00:11:53] David Pagoumian: [00:11:53] yeah, a hundred percent Dan, you know, sometimes look, we have to flip stuff quick and, you know, and, and, and, and, and, and perhaps there's not much that we add other than a good narrative on an email, but for the most part on the stuff that we know needs, the extra level of attention, more granularity, of course, we're running it through our machines and, you know, providing great summaries for our, for our underwriters.
[00:12:16] And, and that's why, you know, we hope that those get to the top of the pile. Now, the other thing too, is everyone's bandwidth, right? Getting in touch with underwriters, you know, I just answered a phone call from it on the right. And now when they call it, you have to answer the phone. Right. Because, uh, you know, you've got their attention.
[00:12:33] And so what we do as well as when, when, when we speak to underwriters, we don't talk about just one account. So in our team, and I know other teams do this well, you know, Hey, I know we're working on this ABC account right now, but I know, you know, Rosemary's got this other one into you, you know, how we looking on that one too?
[00:12:51] And that one's equally important. So it's, you know, when you have them on the phone, talk to them about the few accounts that you have. And, and it's so important. I'll summarize it this way. Cause I know I'm getting a little long winded here. It's so important to learn you're on the writers, know which accounts are really important and what I like to call hot, you know, I think, you know, on our team, we like to breed an account.
[00:13:17] You know, a hot deal is non renewing. A cold deal is to renewing. A 12 cent deal on a, you know, you know, for 30, you know, looking for a 30% rate increase on a 12 cent deal and a warm deal is something that's in between. I, and a lot of times you can get lost on what's warm deals, but in any event, uh, you know, th those are types of things that we're
[00:13:40] Dan Wentz: [00:13:40] doing.
[00:13:40] It's a, a CRC group wide, uh, situation there where everybody is, is sharing information. You're we can talk a little bit about the property, uh, advisory group, the practice a little bit later, but, uh, yeah, it's a good time to be involved with CRC group. We have the tools to help you out with that hard market.
[00:13:57] Um, what do you think about the hard market? Like, uh, how long is this gonna last? This is purely speculation. This is, you know, this should not be considered a. Uh, this is an opinion, not a not fact, but how long do you think it, do you think, based on what you're seeing, this is going to last and, uh, how can an agent be best positioned coming out of this?
[00:14:19] Right.
[00:14:19] David Pagoumian: [00:14:19] So some of the signals right now that I see and based on also, my experience has been that, uh, You know, you're seeing the rates increase. You're also seeing some brokers, CEOs call out the markets and saying, look, you know, be careful because the market will get soft again. You know, there are some instances, and I know this sounds harsh, but there are some instances where perhaps some of the rate increases that we're seeing.
[00:14:50] Or totally unmerited, you know, and I don't want to say on American, cause I know we're all Americans and I'm not trying to be divisive here, but, but you know, there there's listen. I've heard that comment of from our retail brokers on a number of occasions that you know what, this, this right here is on American now.
[00:15:11] I think that's just where we are as a country right now. And that's convenient to say, however, the point is okay, Is that clients and customers insureds, uh, feeling really hurt, you know, by some of the exasperated rate increases. Okay. The fifteens, the twenties, the tens, you know, they on the stand that, but some there's some circumstances where in some cases it's difficult to find coverage.
[00:15:40] Now having said that, I know my on the writing friends will say, well, yeah, during the soft markets, you know, you're just gonna hit us as hard as, you know, the market will allow you, some of that has truth. And some doesn't, you know, there are some clients that, you know, that we have that recognized they could have gotten a 30% reduction and only gotten asked for 15 or 10 and wanting to do it in a more stable environment.
[00:16:05] However we'll it's last look, we've always believed that CRC, that the marketplace is the driving force behind everything we do. It is what it is. It's a market and we're distributors. We have to be on top and out in the frontier of where that market is. Rates are increasing, but the markets aren't making money every day.
[00:16:25] You see on the news publications, these insurance companies. That are saying that they're losing money. Okay. But their rates are going up. That's, that's a scratch ahead of moment. Alternatively, on the other side, you have these leaders that have so much experience that have, are spring boarding into new operations.
[00:16:44] Right. You know, you know, they're starting new MGAs, they're starting new facilities. There's more capital coming into the business. And these are seasoned individuals that know how to control expense ratios, better based upon learning. From the past and they know how to be more efficient in today's new environment.
[00:17:04] So with that said, they're going to want to write business. And the only way they're going to write business is by, is by earning it. And, and as distributors, of course, we're going to be right out there on the frontier, you know, uh, you know, presenting risks to them, uh, for our customers.
[00:17:20] Dan Wentz: [00:17:20] How does an agent, do you have any practical tips?
[00:17:23] I mean, obviously probably the same things we go over, over and over again on this podcast apply, uh, start your, your renewals early, right? As early as you possibly can make sure your submissions are accurate. Uh, I can almost do this part for you, David. I've heard so many times, uh, but make sure all of your information, she's there.
[00:17:44] It's up to date. I mean, obviously they're getting better and better at, uh, the data part of underwriting. Is there anything else that I'm missing that the agents practical steps that they can, they can, uh, take to, uh, to win in this market to better prepare themselves? Yeah, Dan,
[00:17:58] David Pagoumian: [00:17:58] you know, uh, our agents are very smart.
[00:18:01] Uh, you know, they're in a competitive industry and if, if they're not staying ahead of the curve, you know, they know that they're going to suffer the consequences of, of the natural forces in the market. The one thing about the market. Is it's pretty good, pretty quick letting you know what you're doing wrong.
[00:18:19] Right. So, uh, so from that regard, you know, I, you know, if there is one agent out there that's listening to this, I would suggest to you that, you know, I think that, you know, when you're dealing with CRC, we actually look at it as our responsibility to help keep you. In front of your competitors in our discipline, in our space, you know, I'm talking from a properties perspective, Eno, DNO, casualty, whatever it may be.
[00:18:49] We all, we're all similar. We all have practice groups where we're, you know, developing and innovating better ways. Uh, so I, I think that, you know, while a lot of this talk is about what can agents do. You know, I, I, you know, I think it's equally important for them to know what we're doing to help you. And, um, you know, I know for us, uh, when we do talk on our groups that, uh, the theme is execute the basics.
[00:19:16] Well, share bad news quick. Okay. And then after you share bad news, you better have a warm towel and a plan to think about, uh, you know, on what the strategy is to try to, you know, insulate, you know, uh, you know, the rate increase from getting out of
[00:19:34] Dan Wentz: [00:19:34] hand. Of course, uh, just some of the quick highlights of CRC groups since we're kind of at the end of this podcast, right?
[00:19:40] The we've talked about the property advisory group, uh, before, which is a nationwide network of, uh, You guys, the producers who are all sharing information, which I think is, is tremendous. And you guys have a system set up internally so that you can quickly communicate about different accounts and what you're seeing with the markets, et cetera.
[00:19:59] So when you work with the CRC group broker, you're getting that, uh, We've got that ready system that David mentioned earlier, uh, which is a great database system that is proprietary to CRC group leading and wholesale. Right? So that's a, that's a great tool as well. Uh, you have unique insurance products with insure risk, uh, and you can find all this information up on our website, CRC group.com under, uh, Y CRC.
[00:20:27] Uh, we go into great detail about that. So, uh, anything you'd like to add to that,
[00:20:31] David Pagoumian: [00:20:31] David? Yeah, just to round out what you just said, Dan, you know, the one, the one thing, uh, you know, uh, listen, we all have choices, right? And now I work for a company because I'd want to be here. They want me as well. And the same for my colleagues and yourself, this company believes so much in what I'd like to call the knowledge economy.
[00:20:51] Right. And so if you have knowledge, you can use that knowledge to help you do the number one thing any business has to do, which is to. Retain customers and, and get new customers. Right. And that is the same thing that our retailers have to do. They have to retain customers. And keep customers. And so having that deep market knowledge is only going to enable us to bring the best solutions, you know, where I'm going with.
[00:21:22] Dan Wentz: [00:21:22] Yeah, absolutely. No, that makes absolute sense. You know, it's, it's in our best interest to help our agents out and it's in our agent's best interest to use us, to help them out with their buyers to make sure that they're getting the best deals. And you know, like you said before, it's super competitive right now.
[00:21:39] So. Take every advantage you can to stay out front, stay in the lead with that. So great information, David. I really appreciate you taking the time to join us here today.