The property insurance market is experiencing a notable shift after years of steady rate increases. Following seven consecutive years of quarterly rate hikes, the market has reached an inflection point where capital is flowing back into the space and competition is intensifying. This transition presents both opportunities and challenges for middle market businesses seeking comprehensive property coverage.

“I would say rates are under pressure,” said Tom Krause, Senior Vice President, Middle Market Property Leader at Westfield Specialty. “If you look back about seven years, property rates have increased quarter over quarter. And there’s a point in time where the market pushes back on rate increases after 7 years of quarter over quarter increases.”

This market evolution comes after a period of significant volatility, particularly following Hurricane Ian, when many carriers retrenched or exited the property market entirely. Now, with aggregates reorganized and rate structures adjusted, that capital has returned to the marketplace, creating new dynamics for both insurers and their clients.

Understanding the Current Market Dynamics

Tom Krause, Senior Vice President, Middle Market Property Leader, Westfield Specialty

The property insurance market’s transformation reflects broader industry patterns of capital deployment and risk assessment. Following the disruptions of recent years, carriers have taken time to reassess their approaches, review technical rates, and determine optimal portfolio compositions.

“Post-Hurricane Ian, there were companies who stopped writing business. There were carriers that retrenched,” Krause explained. “There were big markets, like Lloyd’s markets, which stopped writing property for a little bit or slowed down their property writings, and that has subsequently changed.”

The return of this capital has created what many consider the most competitive environment in recent memory. “For those of us who’ve been doing this for a long time, 2023 was probably the best property market that we have ever seen,” Krause said. “But now, again, it’s retrenching and there’s pressure on rates.”

This pressure requires carriers to be more selective and strategic about their underwriting approaches. “So now it’s up to us to go through our books of business, decide what types of accounts we want to keep, how we want to continue to diversify our portfolio, and at the end of the day, make profits for our organizations,” Krause noted.

Defining and Serving the Middle Market

While many carriers focus on either small binding authority business or large, complex accounts, the middle market represents a distinct segment with its own needs and opportunities. Westfield Specialty is carving out a specific niche within this space, focusing on businesses that have historically been underserved.

“We define middle market as any account with values of $100,000,000 or less,” Krause said. “The caveat is that our minimum TIV that we will accept has to be over $5,000,000.”

This positioning places Westfield Specialty in what Krause describes as the space “right underneath” the large accounts that attract the most market attention.

The company’s appetite has remained consistent since its property division launched in August 2021, with strategic adjustments to better serve the market. “The appetite that we had then, we continue to have today with some minor tweaks,” Krause said. “These tweaks being limits, pricing, deductibles. We have the ability now in our middle market portfolio to use different levers.”

These levers include condensed primary coverage with smaller limits, quota share primary options, and excess coverage capabilities. “Also, on a certain portion of our portfolio due to where that account is and the limits, we have the ability to offer full limits policies,” Krause added. “So we’ve evolved when it comes to that with respect to the middle market.”

The flexibility to write various coverage structures—including all risk, single peril, and everything in between—allows the carrier to address diverse client needs. “We have the ability to write all risks, including, excluding flood and earthquake, or single peril business,” Krause explained. “If you are a contracted producer with us, there are very few scenarios with which we cannot help you, provided the request is reasonable.”

Building Productive Broker Relationships Through Communication and Technology

Successful underwriting in the middle market requires strong relationships between carriers and brokers, built on clear communication and efficient processes. Westfield Specialty emphasizes personal interaction and technology-enabled efficiency to serve its collaborating brokers effectively.

“We start our underwriting process with five critical questions: What is it? Where is it? How was it built? When was it built? And what is the catastrophe exposure?” Krause explained. “That right there tells us a good portion of the risk story.”

Beyond these fundamentals, the underwriting team seeks to understand the complete context of each submission. “Then at that point, if you’re the broker, I would like to know if it’s your renewal or new business to you. Tell me what your challenges are,” Krause said. “Are there losses? Is your incumbent carrier giving you a hard time?”

This comprehensive approach reflects the value experienced underwriting teams bring to the relationship. ” We are all really experienced,” Krause noted. “We’ve all started as underwriting trainees. Some of us have gone to the retail side, some of us have stayed on the wholesale side, and some of us have even been on the reinsurance side.”

The company has also invested significantly in technology to streamline the submission process. ” We have technology that can take the risk that brokers submit and triage it, if you will, on a scale of one through five,” Krause explained. “This gives the underwriters a sense of whether it’s something that we love, that we can write, or that maybe is not within our appetite.”

This technology performs much of the preliminary work before an underwriter reviews the submission. “More importantly, once the technology triages the submission/risk, it also then goes through cleansing and a modeling perspective,” Krause said.

The efficiency gains enable faster response times and more meaningful broker interactions. “This helps us with speed to market,” Krause confirmed. “Now it gets to the point where, irrespective of what the effective date is, if it’s something that we really like, we can knock it out so much quicker than we could even a year ago.”

Despite technological advances, frequent, personal communication remains central to Westfield Specialty’s approach. “We have found in our time here at Westfield Specialty that what really makes a difference is our team using the phone and having thoughtful conversations. Because you really can talk out all different types of scenarios over the phone,” Krause said. “We like when a broker calls us and says, ‘I’m not really sure if this is a good fit, but what do you think about this?’ Those are the most fruitful conversations.”

The carrier adapts to different communication preferences while maintaining accessibility. “Pretty much anybody that I deal with, they have my cell phone,” Krause noted. “We don’t like to hide behind the computer. We like to be sitting in their office. More importantly, if you’re out and the retailer is giving you some challenges, call or text me. We’ll think about your needs and our ability to fulfill them, and we’ll call and text you right back.”

Looking forward, Westfield Specialty aims to maintain consistency regardless of market cycles. “We want to be known as an entity that has underwriting expertise, who listens to their producers, and meets insureds’ needs during both hard and soft market cycles,” Krause observed.

The company continues to expand its producer relationships strategically, focusing on compatibility and geographic diversification. “We’re looking to add more, but we just want to make sure that the two entities are compatible,” Krause explained. “We want to write business in every state, and in all different ways.”

As the property insurance market continues to evolve, middle market businesses need carriers that combine experienced underwriting, technological efficiency, and genuine collaborative approaches. “At the end of the day, what we want to do with our contracted producers is come up with creative solutions that they can take to the market,” Krause said.

To learn more, please visit westfieldspecialty.com.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Westfield Specialty. The editorial staff of Risk & Insurance had no role in its preparation.