Brokers piece together programs as insurers reduce limits offered

As the commercial auto insurance market struggles to become profitable, one structural change that policyholders face is the shrinking line sizes offered by insurers, according to sources.

“I don’t necessarily think that we have a capacity consideration, but we definitely don’t have the limits being put up that used to be put up in prior years,” said Chris Demetroulis, Kansas City, Missouri-based managing director, transportation, for Arthur J. Gallagher & Co. 

Brokers now must cobble together capacity from multiple insurers to reach desired policyholder limits, he said. Insurers sometimes jostle for position among attachment points in a given program, further complicating the process. 

Insurers may offer capacity on condition of accessing a program at a certain attachment point, said Stephanie McMullen, Blue Bell, Pennsylvania-based Mid-Atlantic regional technical resources director for USI Insurance Services LLC.

Ms. McMullen said consolidation has also reduced capacity, such as when two underwriters, each offering $25 million lines, merge and then only offer one single line subsequently.

Reinsurance, she added, is also a factor, with reinsurers sometimes saying they can no longer support some of the business they previously could. “So, it just trickled down, and it becomes really difficult to manage sometimes,” she said.