“The market will stabilize, but at very high levels” – Oakbridge CEO

Looking to how the insurance market may shape up in 2024, Robbie Smith, Oakbridge Insurance’s president and CEO (pictured) is expecting rates and premium to level off, albeit with a caveat.

“The market will stabilize, but at very high levels,” he said. “Pricing has been pushed up because the rates carriers have set in order to make a profit has risen, while inflation has affected buildings and replacement costs are much higher.”

While Smith believes that the industry has weathered the storm of exponential increases, those numbers are not expected to come down.

This has also resulted in less outliers coming into the hard market to offer more competitive pricing compared to other carriers.

“Being in the industry for 35 years and experiencing hard markets in the past, there is very little competition that is trying to gain a market share by pricing below market standards,” Smith said.

“Let’s face it, most of the insurance carriers have to answer to a board of directors and a shareholder group – and if they are not getting a return on their invested capital and their equity, somebody else will come in and be in charge to ensure more profitability.”

In an interview with Insurance Business, Smith spoke about why specialty brokers/brokerages can help clients find better solutions. He also discussed Oakbridge’s continued expansion in Southern Georgia with its latest acquisition Akin Insurance Agency.

“When you speak their language, they have a confidence to do business with you”

As key threats including climate change and cyber crimes cast a shadow over various industries, Smith believes that specialty brokers are a great resource to strengthen a client’s trust in the insurance industry and its products.

“First of all, the metrics show that specialty brokers grow at a faster rate, they have a higher client retention and there is more client satisfaction,” he said.

Specialty brokers also offer more distinct advisory skills in an affront to public perception that the profession is purely transactional, Smith pointed out.

“When you speak their language, they have a confidence to do business with you,” Smith said.

If a client is providing a niche service or has a more unique risk profile, the may see the benefit in seeking out a broker who is thoroughly versed in finding the best solutions and using more creative problem-solving skills to get a consumer the best coverage and service possible, especially in a hard market.

Moreover, it is hoped that clients will see the benefit in partnerships between both specialty brokers and carriers to bring more clarity towards the end-to-end insurance process, especially claims.

“While certain carriers may offer cheaper options, a specialty insurer with a package that is a little more expensive come with the history and knowledge of paying claims and adjudicating any problems that may arise,” Smith said. “That’s where the advice and counsel move away from the commoditization of insurance and turns it into something that’s a real product.”

“We want to stay in the southeast”

With the announcement last month that Oakbridge is acquiring Akin Insurance Agency, a multi-line P&C agency with offices in Vienna and Cordele, Georgia, Smith and his team are looking to carve out a larger presence in the region.

“We want to stay in the southeast,” he said. “Agriculture is one of those areas that is driving growth in that area, alongside hospitality, healthcare and construction, and Akin is a leading provider of these types of coverage in that area.”

While there is certainly opportunity for growth, especially in agriculture, there are still challenges that will have to require more creative solutions.

“Carriers are changing their capacity appetites, the amount of risk they want to take on for any individual risk is coming down, and the days of being able to ask for favors or combinations on individual risks has really gone away,” Smith said.

This is brought on by increasingly destructive weather events, including hurricanes, that are coming in from the Atlantic and Gulf Coast.

“Hurricane issues are very real,” Smith said. “Also, we’re dealing with more wind issues associated with tornadoes and what are referred to as straight line winds. Georgia is at risk as the storms blow in from Louisiana and Texas.”

“We’re making sure that we have the right spread of risk so that we’re treating our carriers fairly,” Smith said.