Premium Growth: Top 25 Premium Gainers Q1 2009 Versus Q1 2008
Roy H. Williams is an author and marketing consultant. He is known for his Wizard of Ads trilogy. He founded the Wizard Academy Institute. Although he is credited with saying “Consequently, a young business often grows by large percentages. Mature businesses rarely do,” it is unlikely that he was describing the Top 25 writers of property/casualty insurance when he spoke these words.
In fact, when measuring direct written premium as of March 31, 2009, versus March 31, 2008, the more mature P/C companies, consisting of the Top 25 writers of P/C insurance, increased their direct premium written by more than 10 percent over the first quarter of 2008. This represented an increase of $2.2 billion in premium. In contrast, the more than 2,000 insurers comprising the remainder of the industry did not fare as well. Their quarter-to-quarter direct written premium declined nearly 6 percent, down $5.6 billion. Industrywide, direct premium written was down nearly $3.5 billion. Details are shown in the chart below.
In an impressive display of growth, financial stability and marketing acumen, the Top 25 carriers wrote 20 percent of the P/C insurance industry’s direct written premium. Read it again because that was correct; 1 percent of the industry by count wrote 20 percent of its direct written premium in the first quarter of 2009. Although the pricing cycle in the P/C insurance marketplace continues to be characterized as soft, the aggressive growth by the Top 25 leads me to the observation that the softest part of the cycle might have come and gone. In other words, it seems unlikely to me that the companies comprising the Top 25 would need to be particularly competitive on price to obtain growth.
If this assumption is true and pricing cycle has reached the bottom, firmer prices should begin to assist all participants in the P/C insurance industry and demonstrate quarter-to-quarter premium growth. Until that happens, I suspect that the Top 25 will continue to lead the industry in premium growth —on a percentage basis as well as actual dollars of growth.