Risk is rarely one-dimensional. The convergence of different threats on a single carrier is becoming increasingly common. They compound, yielding greater potential insured losses. Catastrophe risk modeling analysis can not be limited to known factors, as they have in the past. One catastrophe can cause insured losses to spike, rendering carriers more exposed than they may have expected. Enterprise Risk Management (ERM) plays a specific role in mitigating the risks of such unexpected exposures. Part of implementing an ERM strategy effectively entails identifying all potential threats. One that has been overlooked—or difficult to identify and model, given a lack of applications and a paucity of data—can be found on the convention center floor.
Archive for August, 2008
Life, Accident and Health cedent behavior was relatively unchanged at July 1, 2008 renewals. Prices have continued to come down, thanks to several consecutive benign loss years. Rates are beginning to stabilize for some product lines, including medical stop-loss and long-term disability, though the underlying reasons varied with the types of coverage sought. Insurers also are starting to investigate multi-year coverage to protect against volatility and maintain coverage in the event of market discontinuity, and reinsurers have begun to respond.
Within the Personal Accident (PA) catastrophe space, the preponderance of cover included full nuclear, biological, and chemical (NBC) terror protection, particularly for insurers with U.S. exposures. NBC prices have declined, especially at lower layers, while XNBC prices are virtually unchanged – effectively reducing the surcharge for complete coverage.
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