As the market impact of COVID-19 bites, we’re noticing clear signs that insurers are making changes to de-risk balance sheets.
Now we can see that poor-performing business lines and troublesome back-year liabilities have been thrown into the spotlight, especially as businesses try to focus on the most profitable market sectors to protect solvency rations or have had to pivot to offer appropriate service levels.
As a result, we’ve recently seen a number of insurers announcing plans to leave specific lines and expect further departures in the coming months, opening up the potential for run-off programmes to increase.
As Mike Jones, president, TPA International comments:
“We do expect to see developments on the run-off front due to the impact of the hardening market which is likely to see companies exiting certain lines of business resulting in an uptick in activity in the run-off space.”
Perhaps the most important factors in a successful run-off will be speed and efficiency. Particularly so for operations primed for a further uptick in claims activity – whether that’s a business interruption or liability.
Mike Jones sees Crawford as a key player here, commenting: “Companies will either take over the liabilities and contract with third-party administrators such as Crawford to run-off the claims or the insurers will close the book and look to ensure that the run-off process is conducted in the most efficient way possible. We are certainly seeing more movement on this front and are in a position to offer the expertise and capabilities to facilitate an efficient run-off process.”
Crawford TPA: Broadspire is second to none in taking over run-off portfolios as well as other distressed claims portfolios and turning them around. We believe their expertise will be in demand over the coming months.
To learn more about what the pandemic means for the insurance industry, please download our detailed report called Responding to a market in flux.