RPS’ Manny Cho: Buyer’s market in ML/PL to continue for foreseeable future

An abundance of capacity means the current softening conditions in segments of management and professional liability – led by sharp declines in public D&O pricing – are likely to persist, according to Manny Cho, executive vice president for executive lines at Risk Placement Services.

The executive – speaking to The Insurer TV at the WSIA Annual Marketplace 2023 – was commenting after the Arthur J Gallagher-owned wholesaler released a report saying pricing was down 10-20 percent in certain segments.

“For the foreseeable future, it probably will continue to be a buyer’s market, there is a lot of excess capacity for almost every line of business we touch,” said Cho.

In public D&O, he said the lack of new IPOs and limited amount of new SPAC or de-SPAC transactions means carriers are fighting over the same finite pool of business, creating “extremely competitive” conditions.

Pressure is also mounting in private company D&O, as new entrants – including those that had allocated capacity to public D&O – are now redeploying to the private segment of the market.

He also highlighted cyber, which has become a “saturated market”, with competitive conditions, and terms and conditions as well as pricing that benefits buyers.

“So it’s a great market for them. And as a wholesaler, it gives us an opportunity to really show what we do best, which is find the best coverage and best terms and conditions that fit the clients,” he commented.

And Cho said he sees little prospect of a near-term shift in dynamics driving that competitive environment.

“I think we're going to see more of the same. I think we might have bottomed out in a couple of areas. So instead of the 10-20 percent rate drop, you might see a flat or a minus 5. But I think carriers have budgets they're going to have to meet – although this year they're probably a little more realistic at what that looks like.

“We will continue to see a very aggressive market and once again, that's great for us as a wholesaler. The hard market is where we prove our wares a little bit, hard to place or limited capacity, but really in the soft market, that's really where our expertise comes through, especially in our areas. And we look at it as a great opportunity to solidify relationships both on the carrier and on our customer side,” Cho added.