The direct market's failure to act decisively to restore pricing discipline post Hurricane Katrina is “Jurassic”, according to Martin Reith, chief executive of Ascot Underwriting.
Commenting on the end of a surprisingly devastating hurricane season, Reith said the lack of response from the market to date demonstrated appalling weakness and apathy from direct writers to take much needed early corrective action.
"Katrina took us by surprise and despite what some others may claim, it took the industry by surprise”, said Reith, "And yet, I am both baffled and concerned at the market reaction to date."
"The direct market is refusing to show discipline and push for change; rather it is shamelessly waiting for the reinsurance market to force the change.
"Quite why some management offers so little direction or guidance to their underwriters is a mystery. There is a culture of silo underwriting in this industry, where underwriters believe they are immune from the effects of these losses because of the classes they write or the location of the risks. They are not.
"There is also a fear of not hitting the quarter's numbers, which dampens the appetite to be more robust with negotiations. But, a rude awakening is imminent," concluded Reith.
