Vikco’s Cindric 'concerned' surging rates in wildfire aftermath will affect quake market

By James Thaler

April 11 - (The Insurer) - A surge in pricing for all-risk commercial property policies in the aftermath of January’s Los Angeles wildfires could squeeze insurance buyers’ budgets and have a knock-on effect on market conditions for quake coverage, Vikco’s Brian Cindric has warned.

Cindric, president of the K2-subsidiary MGA, which is a commercial property cat specialist, made those comments in an interview with The Insurer TV at last month’s WSIA Underwriting Summit in Phoenix, Arizona, where he also detailed how the MGA has scaled in recent years.

Vikco has been around since 1965 and was one of K2’s earliest acquisitions when it was bought in 2014, with Cindric revealing that the MGA has nearly quadrupled its earthquake premiums to around $220 million since 2019.

Cindric attributed Vikco’s growth in that timeframe, amid especially difficult market conditions for cat MGAs, to the strength of the K2 platform and both its distribution and capacity relationships, which has helped his business reach around $320 million in premium in 2024.

However, with industry loss estimates for the January California wildfires generally sitting between $30 billion and $45 billion, Cindric said pressure from the reinsurance market could lead to a downstream impact underlying property cat conditions beyond the wildfire peril.

“If you look at it, certainly the largest event in California's history, (and) depending upon how you stack it up against Katrina from a nationwide perspective. So, it has to have an impact, right?”

“We can't just ignore the fact that we can have that much of a loss and not be a market mover,” Cindric argued, saying the significant percentage of losses from the event absorbed by reinsurers “has to have a knock-on effect."

“You can't have severe convective storm season coming up, and then the wind season, hurricane season coming up, and not look at that,” he continued, while also noting that California wildfire season generally doesn’t begin until October.

“From a property cat standpoint, when it comes to quake, I'm concerned about affordability,” Cindric said.

“If more and more premium goes to the all-risk fire portion of the policy that leaves less on the table for the quake portion, it's already seen as a complementary or optional coverage,” he continued.

“I'm definitely concerned about that, especially in a state where there is no earthquake season. It could happen tomorrow, and a lot of people would be massively uninsured,” he added.

Cindric said Vikco has been exploring the potential for clients to take higher deductibles as a way to secure at least some basic level of quake coverage.

“But that's the biggest concern I see. I think we're probably a couple months away from seeing what the true impact is,” he said.

He acknowledged that the first concern in the aftermath of the Los Angeles wildfires has been making sure policyholders get their claims paid, but that as insurers begin reporting their first-quarter results and cat losses, market conditions could begin to shift.

“As those numbers start to come out, there's just a psychological effect,” he noted.

Vikco has recently made strides to diversify its premium base beyond volatile cat-exposed property and rolled out new offerings in the last two years that include a builder's risk program, habitational offering and real estate investor program.

Cindric said that Vikco generally aims to grow by around 10% a year, but in reality has seen growth closer to the 20%–35% range in recent years.

"We had a couple years where – '23 was a prime example – (there were) very hard market conditions. We had additional capacity that we could deploy," he commented.

"So, that year, we saw a little more growth than we had seen in previous years, maybe upwards of 40% as an organization," he added.