Specialization, Location Key to Positive Results

Conning’s 2012 liability trends study, “Liability and Tort Trends: Trouble Around the Corner?” found that many insurers with the poorest liability results tended to be those that were the most widely diversified. Excess and surplus (E&S) insurers were the best performers followed by multiline insurers with a strong E&S focus.

Specialization and geography play a key role in liability insurer results, according to Conning analyst, Jerry Theodorou.

E&S and regional carriers know their producers, audit them frequently and understand their local regions. Loss ratio varies state to state and is highly correlated with business friendliness or plaintiff-friendliness of the states, he said.

“States do matter, and the smaller regionals that have better market knowledge, that are closer to their producers, closer to their insurers tend to do better than the larger companies that don’t have those geographical loyalties and tend to have national,” said Theodorou.

Stephanie Jones contributed to this article.