The Hartford’s Tooker: Property market “as stressed as I’ve ever seen it”

The current dynamics in the property market are some of the most challenging The Hartford’s Mo Tooker has seen in his career.

In a wide-ranging exclusive interview with The Insurer TV - during a visit to the company’s corporate campus - The Hartford’s head of enterprise sales & distribution, middle & large commercial and global specialty, compared current property market conditions to those after Hurricane Andrew in the early 1990s and after hurricanes Katrina, Rita and Wilma in 2005.

“I'm not sure I can put the right adjectives around it, because I didn't think we'd be where we are today, but it is as stressed as I've ever seen it,” Tooker said.

He called the current environment for cat-exposed personal lines risks especially “dramatic”, while also commenting that the tough property conditions are posing a challenge to every part of the risk chain – to agents, insurers and reinsurers alike.

“There's a stress in the marketplace that I just haven't seen before,” Tooker commented.

“Now, that being said, I think we are all trying to bring solutions to the market, trying to make sure we're bringing capacity, trying to make sure we can get reasonably priced capacity out there, but it is a stressful environment for everybody involved in that customer conversation.”

Tooker – the former president of Gen Re – also spoke of the tightening seen in the reinsurance market, describing property reinsurance dynamics as “fascinating”, as well as noting more differentiation among cedants than he has seen in the past.

“What I'm fascinated to watch right now is, if a primary carrier has distinctive results, do they get rewarded for it or not? Or does everybody get caught up in the vortex that is the reinsurance world right now? I think it's an open question.”

He added: “I think our results – and this is not a place for a commercial – do stand out from a property perspective. And I'm fascinated to see if we get rewarded for them.”

Talent shortage, climate change and tail risks top biggest challenges

Asked to expand on what he views as the biggest challenges facing the industry, Tooker cited climate change, inflation and tail risk as among the most pressing, but specifically placed the shortage of talent at the top of the list.

“Talent has been a challenge for the industry for a long, long time, but that came through in 2021 and '22. If you just look at people's attrition rates it's really, really big, no question around that,” Tooker explained.

In terms of underwriting conditions, the sudden spike in inflation and the increasing frequency of major loss events – such as the Covid-19 pandemic, the war in Ukraine and more severe cat events – had revealed a greater urgency for more precise underwriting.

“I think the one theme, unfortunately for decades, is we don't get paid for tail risk very well. I think we underestimate the tail risk … and I don't think we've gotten consistently paid for tail risk,” Tooker explained.

The executive said current market dynamics have proven that “underwriting is a real science and it's a real skill”.

“I think those underwriters who can make it work in this world of grey, where the trends are not that clear, really will prove themselves in this time period that they've done an incredibly good job,” Tooker explained.

“Getting paid for tail risk – and we've seen a lot of tail risk, whether that's pandemic, climate change, large verdicts – I think a real theme for the industry is getting paid for the risks that were taken.”

Tooker noted that modelling is an imperfect “tool”, and said it was crucial to have colleagues to maintain a sceptical eye and bring the nuances of modelling to “the forefront”.

“Because we as an industry keep discounting [tail risks] and not necessarily pressing at all,” he said.

“We've got to get better at it, and it's not just science, but there's a real judgement to it that, I think, lends itself to real debate and real thorough discussion over time.”

Timing of Navigators deal both “skill and luck”

Tooker – who has been with The Hartford since 2015 – was given additional oversight over the group’s specialty business last September following the retirement of president Doug Elliot.

Tooker called the timing of The Hartford’s acquisition of Navigators – which coincided with an historic market firming that pushed a significant volume of business into the E&S channel – a combination of “skill” and “luck”.

“We saw a bunch of specialty products that we were trying to grow organically, that [Navigators] allowed us to jumpstart and get into those businesses in a much bigger way,” Tooker said, specifically citing the environmental and ocean marine segments as examples.

“We really had that in our plans to make sure that we could take their specialty products set and put it deeper into the wholesale channel, but also into our small and middle-sized customer bases.”

Tooker also acknowledged that The Hartford was fortunate in the timing of the acquisition, which happened to coincide with the hardest market in a generation, resulting in a flood of business into the E&S channel.

“I don't think we really saw the shortage in the excess liability market. And they just had deep product knowledge in both of those areas. So, I think, that's both pieces of the puzzle that really made a terrific acquisition for us overall.”

Commenting further on the acquisition, and his new role, he added: “The fact that we've combined them allows us to go faster at that together. We've got big investments in technology, data and data science.”

Tooker also discussed the view put forth by some in the wholesale community that a secular shift is afoot where more business is expected to flow into the E&S channel as the world has become more risky.

The executive noted that the two biggest drivers of business into the wholesale channel are generally the transactional efficiencies agencies gain by accessing it, in addition to accessing specialised products and expertise.

“I think the deep specialisation in the wholesale market is always a nice complement to the retail market, so I don't see that changing. The second element – how do we make the smaller [risks] more efficient? To me that's one that I think will be interesting to watch,” he explained.

“As technology comes in – [such as] data ingestion – are there more of those smaller risks that retail agents are able to solve for on their own? I don't know, it's something we're watching closely.”

Tooker emphasised that his company is “excited to be in both channels” and that he expects both retail and wholesale to be “vibrant for many years to come”.

“I don't think it's really a competition in our mind, but we're excited to be servicing both.”

Asked to give his view on the current state of distribution, Tooker called the growing “size” of The Hartford’s agency and broker partners “an interesting strategic question”, as the profile of those businesses continues to evolve.

“I think there's an overlap there that we'll have to figure out over time, but broadly, I think [with] the [bigger] size, I'm hoping it leads to better customer focus, better service to our customers,” he said.

“I'm not sure that's always the case, but we do have a hope there.”

The Insurer TV will be running more content from the full 17-minute interview with The Hartford’s Mo Tooker later this week. Click on the link at the top of this article for the video.