That’s the assessment of a group of high-level insurance professionals who participated in a recent Advisen/Allied World North America webinar on the state of the property/casualty market.

Low cat losses, a strong equity market, slightly higher interest rates and an improved economy have contributed to positive returns for property/casualty insurers in 2013 and early 2014, according to Dr. Robert Hartwig, president of the Insurance Information Institute.

Those factors are providing a “tailwind” going into the remainder of this year and without major interruptions the solid market is expected to continue into 2015, he said.

Legislation to renew the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA or TRIA) has been introduced in Congress and the Senate seems more predisposed than the House to approve it, Hartwig said.

The current version of the act expires on Dec. 31, 2014.

It has been “an unambiguous success,” Hartwig said. But “the reality is the act was viewed as temporary” and some lawmakers confuse TRIA with the National Flood Insurance Program, which is $24 billion in debt, he said.

Marsh’s 2014 Terrorism Risk Insurance Report indicates the number of companies purchasing terrorism insurance has remained constant — in the mid-60 percent range — since 2009 and pricing has generally remained stable. In terms of percentages, educational institutions are the biggest purchasers of property terrorism insurance at 81 percent, followed by healthcare, financial and media organizations, according to the Marsh report.

“I’ll make the prediction that TRIA gets renewed with some changes … and probably at the last minute,” said Allied World Executive Vice President and General Counsel Wes Dupont.

A measure backed by a bipartisan group of Senators would increase the copayments of private insurers from 15 percent to 20 percent. The bill also includes a seven-year reauthorization, but Lou Iglesias, president of Allied World North America, raised the possibility that the bill if passed could ultimately have a three-year renewal date.

But, he said the industry is well-capitalized now and is able to handle more risk than it was more than a decade ago.

“I think industry is better able to understand and write that risk,” Iglesias said. And “if we get a three-year renewal, we’ll be talking the next day about what will happen three years down the road.”

Ultimately, “the smooth operation of insurance industry is essential to recovery after a catastrophe,” Hartwig said. “Insurance is part of the fabric of the nation’s economic recovery.”

A Good Time

It is a good time to be an insurance buyer — terms and conditions are okay, there’s more stability in pricing and price increases have stalled, according to Manuel Padilla, director of risk management at MacAndrews & Forbes Holdings Inc.

The influx of capital into market may be contributing to the positive environment for insurance buyers, but Padilla said many risk managers are wary of developing relationships with new, untried entrants.

“Capacity is just a number, it’s what’s behind the capacity that’s important to us,” Padilla said.

Much of that new capital is going into the reinsurance market, Hartwig said, and reinsurance rates are “plummeting.”

He characterized the environment as “experimental” and said what is less clear is whether the alternative capital, such as hedge and pension funds, will stick around if they begin to experience losses.

Hartwig questioned whether they will participate as meaningfully as they do today when the inevitable cat event occurs or when traditional investments for hedge funds return to profitability.

“It’s a marketplace, a supply and demand marketplace,” Iglesias said. “But it’s a risky business and some capital may not understand what they’re getting into.”

As the global economy comes back and there’s opportunity for return elsewhere, hedge funds may seek other investments, he said.

“You get what you pay for,” Padilla said. New entrants to the market may promise price and capacity, but tomorrow they may change, he said.

Broker Evolution

While there may be a few bumps in the road, Matt Keeping, chief placement officer at global insurance broker Willis, expects his team will be “incredibly busy” in the next six to 12 months.

“We are seeing an evolution of how brokers are performing,” he said. “We run a very high retention rate … [and] we’re engaging with our clients on a weekly if not daily basis.”

“Brokers are generally more attuned to the issues I have to deal with,” Padilla said. “It’s no longer a buying transaction … there’s more quality in the way they’re looking at risk.”

He added that brokers are maturing and providing a very important relationship with the underwriters.

“From a buyer’s perspective we see smooth sailing,” Padilla said. “We’re looking at acquisitions … we expect they’re going to go fairly smoothly.”

(This story previously ran in our sister publication Insurance Journal.)