Alex & Al - Coast to Coast: Alex & Al Welcomes Lyndsey Christofer, Chubb
By Alliant Specialty
Alex Littlejohn and Al Tobin sit down with Lyndsey Christofer, Executive Vice President, Chubb Construction Major Accounts, to discuss current trends in the construction industry and the top three areas we should prepare our clients/prospects to look out for when it comes to pricing, coverage and exposures.
This is Alex and Al Coast to Coast show dedicated to exploring insurance news topics and trends shaping the market. Today. Here are your hosts, Alex, little John and Al Tobin.
Alex Littlejohn (00:15):
Well, hello listeners. And welcome back to the Alex and Al Coast to Coast podcast. Today. We're going to have a superstar guest from Chubb, Lindsay Christopher, whom I know many of you have worked with in the past. She's EVP with the large account construction division. Before we dive into it though Al and I have some news to talk about. So Al let's go on the product side. What are you hearing about? Let's talk a little bit about hurricane season.
Al Tobin (00:41):
Sure. Super, very timely for our audience and welcome everybody. Al Tobin from New York and Alliant, a lot going on in the marketplace. June 1st is a really big property renewal time. Most of the accounts with catastrophic exposure want to get it done before then before things start cropping up in the Atlantic basin. So, on the underwriting side, I think there's a little bit of underwriting fatigue going on right now. You know, there's a lot of activity, a lot of new submissions, a lot of customers are asking for deductible changes, limit changes, possibly not buying certain layers or maybe even going to a carter retention which is kind of a new thing to save cost. And they're going back to underwriters and asking for a series of quotes. So, if underwriter X had 10 renewals for June 1, he's probably re-quoting them two or three times. So, that's gone up three times and that's a lot of on the underwriting side and we need them and we're looking forward to celebrating post-June 1st from a carrier perspective.
Alex Littlejohn (01:52):
Oh, Al I was just going to ask, I mean, I'm kind of hearing good news around capacity though. I'm not I'm hearing that programs are getting completed compared to last year where there was just apps all over the place. What are you seeing anything on that side?
Al Tobin (02:08):
Yeah, so, I think there's definitely some new entrant into the field. Certainly, some new capacity coming out of London. There's new capacity in the states, you know, for example, use a big company like our guest today. If they like a risk, where they were putting up 10 million last year, they're more than comfortable to putting up 15 on renewal this year for the right risks. So, you know, capacity is available. There's still a lot of arduous underwriting going on. One of the things that is slowed down the process is COVID has impacted India in a dramatic way, as we probably all read about. India is a major supplier of intellectual capital to the property insurance world, through the modeling groups I myself have been there and witnessed the amount of folks that work there and the amount of clients they have and their clients are not just our retail clients, but are all the insurance companies that need to model.
So that has created a bottleneck with those folks, unfortunately have been impacted themselves by COVID, but their families and friends, as we've all read about. So, our hearts go out to them right now and moving right along, you know, that is a critical component to getting property insurance done in any time of the year. From the standpoint of modeling. And back to the question about hurricane season, you, NOAA has forecasted an active year, something in the neighborhood of 13 to 20 name storms, let's get down to the important ones, they think three to six majors. And what is that doing? That is driving customers to be active in the buying of deductible buybacks, paying strict attention to their modeling results. We used to say 250-year event. Now we're saying 500 I've heard up to 10,000 people are looking at from the standpoint of purchasing limits. So, a lot of activity in that regard, Alex.
Alex Littlejohn (04:05):
Okay, good to hear. Well, it's almost over. So, fingers crossed that we get through the renewal season good. And then we say lower than those six storms because no one needs that. I just wanted to add onto this and this may not be really under the guise of a product, but we're, Alliant in conjunction with the FBI is going to host. And I know this is near and dear to your heart out a webinar for our hospitality clients and anyone quite frankly that wants to join on human trafficking. It's a presentation very well done out of the FBI hub in New Jersey, focusing down in the Atlantic City area and how they are working hard to stop human trafficking, but also giving our clients and prospect ways of understanding how to prevent and be aware of human trafficking that could occur on their properties. So, look forward to that probably the end of June, once we get through the court or we're looking to do it, maybe that second week in July, it's really well done. So we're looking forward to it.
Al Tobin (05:08):
I'm just going to say that's very timely for our hospitality clients because hospitality has changed dramatically. Maybe not necessarily the beachfront hotels that people go on vacations, but the inner city hotels have really changed their occupancy, you know, from tourists to other aspects based on what's going on in local geography. So very timely in that regard, Alex,
Alex Littlejohn (05:32):
I just had one outrageous that I wanted to throw out there Al about. I know you'll probably hit on the constant movement of people, but I'll tell you it's a turn for the worst in auto. And you know, maybe Lindsay's going to bring this stuff when we talk to her but fires need to be where limits within that first 10 million is continuing to take a turn. There is reinsurance that could be solving for it. But anywhere between that 8 million excess of 2 million in the auto realm really is driving outrageous costs. So, right where we might be seeing some light at the end of the tunnel on the property side we are ramping up on and continue to ramp up on the auto and excess liability side. So, we called it and said that primary was going to be affected. Well, it's now being affected and it's continuing to drive poor results on the auto side. So, our buyers need to be aware. Al anything else you have to add on the outrageous or funny?
Al Tobin (06:25):
Well, I kind of look at it as fun because I was in the New York city office the other day and just we've invested as we are across the country and some serious talent on the M&A side specific to transaction liability. And our team was just humming, you know, half a dozen new employees in the past six months working on lots of new opportunities and binding deals. And it kind of just made me feel like I can't wait to get back into the office full time. So, I'll visit New York City a little bit more often.
Alex Littlejohn (07:00):
Ah, that'll be great. It looks good to have you in there. I was there last week and it was a lot of fun and thanks and shout out to all those that hung out and we got to get together and meet each other. It was really great to be back in New York city. So, all right. Well, without further ado, we have a special guest as mentioned in the opening Lindsay Christopher, whom is just a veteran. I know I hate saying that Lindsay, I'm sorry, but a veteran in the construction industry and she has been with Chubb for quite a bit of years. She started her career in New York with AIG and then moved over to Chubb and now been there, I think almost 10 years, but great news. And we're super happy to have you great appointment last month where Chubb promoted Lindsay to Executive Vice President.
And she's now the construction industry practice leader for the large account segment. And this comes with all the things you'd expect the title and responsibility of such to have where, you know, she's overseeing this you direction and she's leading all of the teams. And so we thought, you know, Al and I, if we talk about who our guest should be, we thought it's super topical to have a person like Lindsay, join our podcast and just give us a little bit of insight into what's going on. So, Lindsay, first of all, congratulations, we're super excited for you, love to hear things that are going on over at Chubb and, we kind of have a few questions.
Lyndsey Christofer (8:24):
Sure. Thanks Alex. And thank you both Alex and Al for having me today. It's very exciting to be on it is my first quote on quote interview. So, I'm thrilled and definitely no better way to start it off and, you know, thank you for having me out to talk about Chubb and our industry, our construction industry practice. So I've been in the role about six weeks now. It's been very exciting, very fast paced, but it's exciting for me. As Alex mentioned, I've been at Chubb about eight and a half years now, always in the primary casualty construction underwriting space. So, this broadens my view a bit more and really excited for that. So, in this new role, I have direct responsibility for the primary and excess construction groups within Chubb and also oversight for our larger construction industry practice, you know, incorporating the surety, builders risk, environmental, all the other lines that touch construction. So, really round out Chubb's product offering for large national construction clients. So Chubb and specifically our construction industry practice, we're really focused on quality and execution, and I'll be looking to continue the success and ambition of my predecessors of how do we build a sustainable platform for our construction clients that will really at the end of the day, allow us to provide topnotch service to our clients across multiple lives of business, breaking down those silos.
Not just for focusing on each individual line of business, but really providing a holistic approach and focusing again, not only just on the insurance policies, but the services that we provide the last control, the claim services have also take some great value ads that we have are physicians and global client executives, claim, business consultants, you know, dedicated individuals that become a single point of contact for our insureds. When often across many lines, these large complex accounts can have multiple brokers, one on primary, one on casualty yet Chubb might write pieces of the portfolio and in different areas. So, we really try bringing that service aspect into every aspect in every line of business. So, that's what we're trying to do. And I'm definitely looking forward to continuing down that path and seeing what we can do to just increase our quality of service and execution for the construction industry practice. You know, it's something I'm very passionate about and our team of people at Chubb within our construction team, it's just a phenomenal group of individuals that I'm really privileged to work with every day. So, it just makes it that much easier and that much more fun on a day-to-day basis.
Al Tobin (11:12):
Can I ask a question from the economic standpoint, lots of things changed in 2020. A lot of things are put on hold. You know, certainly a lot of our clients suffered a significant reduction in revenues. I suspect the same has happened in the construction side where projects were maybe poorly capitalized and were unsure about the future. And how is that taken off on the early 2021 and how do you guys see this leading into next year?
Lyndsey Christofer (11:40):
You're definitely right. Our clients were hurt just like the other industries, right. And a loss of revenue. I would, I think E&R reported about a 20% loss in or revenues down about 20% overall across the industry backlog certainly shrunk last year, as we saw not much new work being added to the backlog, but our contractors sort of working off that, working off that backlog. Luckily, construction in many areas was deemed essential fairly quickly. I mean, definitely each state was a little bit different and had kind of their own protocols on what was deemed essential and what wasn't. So, we did see construction pick back up and get back to work, but they lost a lot of efficiency and productivity. When they were trying to follow social distance protocols or a lot more expense on their end, too.
That was never forecasted, never budgeted for, in terms of additional PPE or more man. Well, maybe not more man hours, but man hours spread out over different shifts, contractors working different shifts to limit the number of people on any site at some given time. So, definitely was a tough year for our construction clients as well. There were in the transition, you know, 2021, I would say, things are coming back. We are seeing construction is starting to pick up month after month, the reports are positive, the architectural billings are positive. They're all moving in the right direction. So, we are starting to see momentum. It's certainly not back to where it was in 2019. We were in a very healthy construction market in 2019.
And I do expect that by 2022, we'll get back there, but it hasn’t quite picked up yet, but I do think for the most part, our contractors are doing well and sustaining their revenues and slow increase I would say in their revenues.
Alex Littlejohn (13:34):
So, just to follow on Al's question for our clients and potential clients and potential clients of Chubb, what are the areas that they should be prepared? How can we slash our clients, you know, best prepare them for this transitional year, this upcoming it's COVID sliced with a hard market. That was our right. And if we go into it, we're in a hard market and then we get hit with COVID. And what could you tell our listeners and for the benefit of Al and I, you know, what should we prepare our clients and prospects for?
Lyndsey Christofer (14:09):
Yeah, I would say, you know, a few things, one is it's still a hard market. Rates are still firm Alex, as you mentioned, you know, auto, it’s not pretty. And the results are very tough. A lot of carriers are feeling that the results are poor. Some of these losses and settlements are just so outrageous. And we're seeing it across the board, you know, at fault, not at fault accidents, we're just seeing millions of dollars on every settlement. So, whereas from a casualty, property things may be starting to slow down slightly, auto has not. So, be prepared it's still a hard market, even if you, and I would say, as you know, the market, I would say is starting this often, slightly, and it, and it will continue to, but I wouldn't expect a full softening of the market for a while.
And I also would caution that even after this, you know, market correction call, it might be, might be over, you know, underwriters and insurers will be more comfortable with the adequacy of the pricing of their accounts, right? They'll feel that their accounts are just in a healthier position. Carriers will ask after this correction or this really struggle to get rates and get pricing to that adequate level. They'll be looking to keep up with loss trends every year. So it doesn't mean that once we, you know, are done with sort of these big rate, changes that we're flat from there on out, right. That's not the case because that's what got us here to begin with is that the market was so soft. It was flat rates. It was rate decreases and decade without keeping pace with the inflation and the inflation and escalation of these claims costs.
So keep that in mind, rates will continue to rise at a much more modest pace, but there will still be increases better information drives, better underwriting results. So, part of the hard market is coverage and as well rates have increased, but coverages terms and conditions have become harder to provide. And the underwriting information needed has become a bit more in depth and carriers across the board are really diving into specific and certain coverages that maybe in the past, they didn't as much, it was more of a marketplace standard coverage. Whereas we've seen losses emerge from some of these coverages. So, the underwriting process has really morphed and grown there. So, have that data, provide your underwriters with what they're asking for, because at the end of the day, they need the data to underwrite the risk and make the case right.
To price your risk better than the next, but without the data, without the information, you're not arming them with anything. Then I would say start early, each account is still difficult. There's still a lot of fluctuation in the market, in the excess layers. So, start early develop relationships with your underwriters and your carriers because it really helps. And it helps when we see it help. It's not, when it's a soft market, you get things done really easy. You see it help when you need something, when you have a hard time and you can't make a premium payment or you need a coverage that really wasn't anticipated and you see those relationships and you see that trust develop over time, that really helps when push comes to shove and when there's a difficult situation, so it's a worthwhile investment.
Al Tobin (17:43):
So, Lindsay taking that step further, I suspect then you're encouraging your underwriters and your brokers to get clients on the phone, do some zooms, get out early, discuss what expectations are.
Lyndsey Christofer (17:59):
Absolutely. Yeah. And specifically, we're always happy having to meet our clients always have to be to arm you and brokers and clients with our data or your own loss data or whatever we can to show you, you know what we're looking at, how we're underwriting the risk, what the losses in the market, what we've seen, we try to be very transparent with our clients and brokers.
Al Tobin (18:23):
Great Lindsey. That sounds great.
Alex Littlejohn (18:25):
Yeah. Lindsey just appreciate you coming on and having a chat with us. It's great. And it's informative and we take it as a highlight. So, hopefully it joins on the questions that come our way. And we keep on talking because I think the way we communicate around this is absolutely incredibly important to get good results from our market. So, I just want to thank you again for coming and joining on and Al close it out.
Al Tobin (18:50):
Okay. Well, once again, thanks from Alex and Al Coast to Coast at Alliant. Leave it off with everybody. We'll talk to you soon and stay classy out there insurance industry.
Thank you for listening to this episode of Alex and Al Coast to Coast. For more information, visit us at www.Alliant.com.
Alliant note and disclaimer: This document is designed to provide general information and guidance. Please note that prior to implementation your legal counsel should review all details or policy information. Alliant Insurance Services does not provide legal advice or legal opinions. If a legal opinion is needed, please seek the services of your own legal advisor or ask Alliant Insurance Services for a referral. This document is provided on an “as is” basis without any warranty of any kind. Alliant Insurance Services disclaims any liability for any loss or damage from reliance on this document.
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