When a soft market finally turns, brokers find out which insurers held their nerve and which ones followed rates down and then came back asking clients to pay for it. Mike Abdallah (pictured), outgoing chief underwriting officer for Australia and the Asia Pacific at Liberty, has spent nearly three decades at the global mutual insurer arguing that the answer can turn on who owns the insurer. He says the mutual model is why his book behaved differently.

Abdallah, who is based in Sydney and retires at the end of this month after nearly 60 years in the industry, is direct about the advantage.

"We've also benefited from being a mutual, because they're not having to hit top line for shareholders," he said. "I have had the opportunity to think long-term, act long-term, and build for the future. And also to be able to say no for the right reasons."

The mechanism is a capital one. Liberty is part of US headquartered Liberty Mutual Insurance Group, a policyholder-owned mutual. Abdallah's commercial and specialty business in the region places all of its cover through brokers.

"As a mutual, we don't generate capital without profit," Abdallah said. "We don't generate capital from top line. We only generate from profit. So that's what I keep coaching our people."

That distinction, he argues, is what allows an underwriter to step back from business that no longer prices.

"If you've got all the capital in the world, you don't have to give it back. You're not being told to grow irrationally at the wrong point in the cycle," he said. "But having that capital and not having to give it back and using it in an effective way enables you to be patient through the cycle – my God, that is a superpower if it's in the right hands."

The qualifier is deliberate. Abdallah does not claim the structure works on its own, only that it removes the pressure that makes discipline hardest to sustain.

How a broker can tell who will hold

The more useful question for an intermediary is how to identify that discipline at quote stage, before the cycle tests it. Abdallah's answer is to look at which set of numbers an insurer manages to.

"There are two things in our business: there's the underwriter clock, if you like, and then there's a broker clock," he said.

The distinction is between current-year rate adequacy and reported profit. "What you see in an underwriter's clock is based on the running rate of the current business, versus a broker's clock, which is the P&L, which brings in prior year development – whether that's good development or bad development – but it confuses the current year, because it's not the running rate of the business."

An insurer reading the second can look healthy on releases from earlier years while writing current business at inadequate rates.

"That is the true rate of the current business. It's not making ourselves feel good because we've got prior year releases that make our results look good," Abdallah said. "Yes, it's helpful from a results point of view, but your actions need to be determined by the running rate of the business based on your actuarial underwriting year triangles, if you like."

He points to the COVID-19 pandemic as the vindication. Liberty was tracking rate adequacy against its underwriting year numbers rather than waiting on reported profit and he says that showed the position before the P&L did.

"We knew where the market was going because of price adequacy and we aligned it with the actuarial underwriting year numbers," he said.

For brokers, this is the practical test. An insurer that manages to the P&L is structurally more likely to keep writing at rates it will later need to recover from the client. An insurer freed from top-line pressure and reading current underwriting year performance has both the information and the licence to stop.

Why more insurers aren't structured this way

If the advantage is real, the obvious question is why more large broker-facing insurers aren't mutuals. Abdallah's answer is that most would take the option if it existed.

"I think, to be honest, if they could, I think they would," he said. "They're stock companies now. How do you mutualise them? I think that would be a challenge."

The mutual sector is substantial. Mutual and cooperative insurers wrote USD 885 billion in non-life premiums globally in 2024, a 29.7% share of the non-life market, according to the International Cooperative and Mutual Insurance Federation's Global Mutual Market Share 2026 report. But the direction of travel is effectively one way: a mutual can demutualise and list, as NRMA Insurance did in 2000 - with the listed entity becoming Insurance Australia Group (IAG) - but there is no established route back.

For the insurers on the other side of that door, surplus capital can do the opposite of what discipline requires. Abdallah described the abundance of this capital as a driver of aggression rather than a stabiliser, saying the sector is now heavily capitalised and that this is fuelling aggressive behaviour and a desire to put premium on the book. It is precisely the condition his own structure was designed to insulate against.

Which brings him back to the client. His instruction to underwriters is the one he would give any broker assessing a market - don't follow the market down for the sake of it and build differentiation and real value for the client.

"Too often our industry falls into the trap of forgetting who pays the premium and who accepts the risks," he said. "If we make the mistake of allowing our industry to become 'commoditised' we only serve to erode our value propositions and discredit ourselves in the eyes of the paying clients who rightly expect choice, value added services and consistency."