Windstorm Xynthia: A powerful Atlantic storm named Xynthia battered Western Europe with hurricane-force winds, surging seas and driving rain on February 27 and 28, causing widespread property damage and disrupting transport networks. According to recent estimates, the storm has left at least 56 people dead across France, Germany, Spain, Portugal and Belgium, and more than 1 million households have been left without power. At least 47 of the fatalities have occurred in France, which has been the country worst-affected by the windstorm.
Directors and Officers Renewals - Stabilization in Pricing: In general, Directors & Officers insurers continued to experience some stabilization in pricing and a normalization of exposure in both the Commercial and Financial Institutions segment. For commercial risks with attractive risk profiles, the market remained competitive with average primary rate changes ranging from flat to a decline of 8 percent. After two years of dramatic rate increases, the financial institution segment showed signs of moderation as rate increases slowed.
8.8 Mw Earthquake in Chile: A massive earthquake struck off the coast of Maule in Chile at 6:34 UTC on February 27, causing severe damage across of the country and claiming more than 700 lives in Chile’s biggest earthquake for around 50 years. The earthquake, measuring 8.8 Mw, was located 60 miles (100 kilometers) north-northwest of Chillan and 200 miles (325 kilometers) southwest of Santiago, according to the US Geological Survey (USGS). The USGS added that the quake was centered about 21.7 miles (35 kilometers) underground and was felt in Argentina. This is the joint fifth largest earthquake ever to be recorded, according to the USGS. Around 150 aftershocks have hit the region since the main earthquake, the most powerful at 6.9 Mw.
Errors & Omissions Insurance at the January Renewals: Anticipating that the recent economic downturn, as it had in prior occurrences, would result in increased claims activity, primary insurers sought rate increases. The highly competitive market environment prevented them from realizing the increases. Primary E&O rate reductions continued downward in 2009, averaging declines between 5 percent and 10 percent for insureds exhibiting no material change in exposure and loss activity. Certain sub-segments, such as small to mid-sized law firm business, are indicative of the highly competitive landscape of the E&O segment.
UK Property Jan 1 Renewals: UK average rate changes ranged from declines of 15 percent to flat. Excess of loss cat rates declined by 5 percent to 10 percent. Property Fire Risk rate changes ranged from declines of 15 percent to flat, with variations determined by loss experience. Risk pricing will continue to be under pressure and the market competitive as long as the primary market continues to see depressed rating levels. The Reinsurance Property lines have been profitable over time, but because the UK falls into reinsurers’ peak Northern European Cat zone, capacity is usually finite.
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Indexation Clauses in Liability Reinsurance Treaties: A Comparison Across Europe: The Indexation Clause - otherwise referred to as the Stability Clause, Inflation Clause, or Severe Inflation Clause (SIC) - is designed to maintain the real monetary value of the retention and (where applicable) the limit under a long-tail excess of loss (XOL) reinsurance treaty over the duration of the claims payout pattern. The clause is only relevant to losses that are of a long-tail nature (i.e., that take a long time to become paid) and is commonly found in the terms and conditions of Motor Liability (MTPL), General Liability (GTPL), and Professional Liability TPL XOL reinsurance contracts of European cedents.