Thursday, July 5, 2012

MEL Mononline Market Changes

Over the last few months two significant players in the MEL market have stopped writing.   One stopped everything and the other just MEL.     Whilst there are still approximately 20 or so underwriters of monoline MEL today in London and the US, these two had significant shares of the market and so we expect to see some shift in pricing in three areas:

1.            The high risk, hard, heavy "working" MEL - here pricing will go up.

2.            The very low hazard "if any" type of risk where minimum premium are rising.

3.            Risks which were perceived by one of the departing markets as "soft"/low risk accounts, which other underwriters might see as hard

The first of these will be very much dependent on the account, but do expect more detailed questions on individual claims especially if still open. 

The second may only be a rise of $500 - $1,500, but that could be up to 40% of the premium to a small MEL client.

The third and last are the most critical, in one case recently we have a range of quotes on a CLEAN account where the most expensive was 20 times (yes TWENTY times) the lowest, not due to some rate scale, but the perception of the most expensive underwriter was that it fit into Category 1 and the others considered it a Category 2 account.

As with any market change there are three key issues...

Information - especially detailed claims history, explanation of injuries and detailed status on open claims particularly

Time - turning around the best quote for most, today takes a week - something more if there is missing information up front. 

Market Access - are you covering all the markets?    If you are dealing with London, does your Lloyd's broker regularly access the dozen or so underwriters there that write MEL or do they just regularly go to the same one or two?

This is no longer the quick, easy line it was for many clients.  It will take work and preparation for most.

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