Archive for September, 2010



September 30th, 2010

Continental European Legislative and Judicial Trends: German Federal High Court Decision: Causal Link Between the Use of Medication and the Occurrence of a Bodily Injury

Posted at 2:00 AM ET

2010_legislative_thumb-2David Lewin, Managing Director
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In March of 2010, the Federal High Court of Justice (Bundesgerichtshof, in the following,”High Court”) handed down an interesting judgment regarding causality between the use of a medication and bodily injury suffered by the patient (Judgment of March 16, 2010, VI ZR 64/09). (1)  In addition, in this context the High Court reviewed the problem of contributive causation as well as the applicability of the principle of prima facie evidence.

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September 29th, 2010

Continental European Legislative and Judicial Trends: Developments in France: Old News and Recent News

Posted at 2:00 AM ET
2010_legislative_thumb-2David Lewin, Managing Director
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Newsworthy events observed in the first half of 2010 fell into two categories. “Old news” includes recent decisions that give confirmation to a now stabilized jurisprudence but do not constitute new case law. “Recent news” refers to discussions of revolutionary instruments which are not currently being used in insurance law, but may acquire major importance in litigation before French courts.

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September 28th, 2010

Continental European Legislative and Judicial Trends: Recent Developments in European Union Motor Insurance Law

Posted at 1:00 AM ET

2010_legislative_thumb-2David Lewin, Managing Director
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Follow-up on the Rome II Study

The Rome II Study on Compensation of Cross-Border Victims in the European Union, published by the European Commission (Commission) in January of 2009, focused on terms of compensation and limitation periods. It was issued after the entry into force of Regulation 864/2007 of the Law Applicable to Non-Contractual Obligations (also referred to as “Rome II”) and was subsequently made subject to public consultation. As has been previously noted, the Rome II Study was intended to form an integral part of a “Green Paper,” setting out future policy options as regards motor insurance and cross-border accidents in Europe. The subsequent consultation was essentially a means of obtaining the views of all interested parties on the effects of the application of foreign law to claims arising from cross-border road traffic accidents. Continue reading…

September 27th, 2010

Update: Tropical Storm Matthew

Posted at 8:53 AM ET

Tropical Storm Matthew, the thirteenth named storm of the 2010 Atlantic hurricane season, hit Central America over the weekend. The storm made its initial landfall in a sparsely populated region near the eastern tip of Honduras and northern Nicaragua at around 18:00 UTC on September 24. Matthew subsequently moved across Honduras before re-emerging in the Caribbean Sea and making its second landfall in Belize on 25 September. Matthew was tropical storm status as it moved across Nicaragua, Honduras and Belize, minimising the winds associated with the system. However, Matthew’s heavy rainfall triggered flash floods and landslides across a region already suffering the consequences of an unusually intense rain season.

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September 27th, 2010

Continental European Legislative and Judicial Trends: Recent Developments with Regard to the Principle of Utmost Good Faith in Insurance Law in Austria

Posted at 2:01 AM ET
2010_legislative_thumb-2David Lewin, Managing Director
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Austrian Supreme Court Defines “Non-Statutory Duties to Inform” on the Part of the Insurer

In a decision of the Austrian Supreme Court in November of last year, the court specified a further case of non-statutory duty to inform on the part of insurers, which derives from the principle of utmost good faith applicable in insurance law.

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September 27th, 2010

Continental European Legislative and Judicial Trends: Introduction

Posted at 2:00 AM ET

2010_legislative_thumb-2David Lewin, Managing Director
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Recent Legislative and Judicial Developments in Continental Europe is the latest installment in Guy Carpenter & Company Ltd’s (”Guy Carpenter’s”) legislative update series, designed to provide our international clients and markets with a concise overview of key trends in the Continental European legal environment. These issues have had an impact on insurers and reinsurers or are expected to have an effect in the near future.

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September 24th, 2010

Tropical Storm Matthew

Posted at 9:28 AM ET

matthew-small-092410Tropical Storm Matthew, the thirteenth named storm of the 2010 Atlantic hurricane season, developed on September 23 in the western Caribbean Sea and is currently located approximately 230 miles (375 kilometers) east-southeast of Cabo Gracias a Dios on the Nicaragua/Honduras border, according to the National Hurricane Center (NHC). Matthew currently packs sustained winds of around 50 mph (85 kmph). The storm is travelling in a westerly direction, and a gradual turn to the west-northwest is expected over the next 48 hours. On this forecast track, Matthew is expected to be near or over northeastern Nicaragua and eastern Honduras later today. The NHC said tropical storm-force winds extend 45 miles (75 kilometers) from the center of the storm.

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September 24th, 2010

Week’s Top Stories: September 18 - September 24

Posted at 1:00 AM ET

World Catastrophe Reinsurance Market: Part III, Catastrophe Model Developments, Impact of Changing Regulations: The increasingly complex nature of the reinsurance industry and the growth in alternative risk transfer instruments such as catastrophe bonds have reinforced the importance of catastrophe models and data management platforms in the risk management process. Such innovations have allowed (re)insurers to improve their understanding of natural perils while accurately estimating potential catastrophe losses to their portfolios and managing their exposures.

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World Catastrophe Reinsurance Market: Part I, Introduction, Catastrophe Events: 2010 has been a difficult year for the reinsurance industry after it suffered one of the most costly first halves on record. Spiraling costs from disasters such as the Chilean earthquake and the Deepwater Horizon explosion in the Gulf of Mexico meant (re)insurers’ catastrophe budgets took a severe hit even before the hurricane season had started. Although insured losses reached USD23 billion in the first six months and an active hurricane season has been forecast, reinsurance rates generally declined through the 2010 renewals as surplus capital drove down prices.

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Guy Carpenter Examines Excess Capital Strategies At Monte Carlo Reinsurance Rendez-vous: Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, hosted its third annual press briefing on September 11 at the Reinsurance Rendez-vous 2010 in Monte Carlo. During the briefing Henry Keeling, President and CEO of Guy Carpenter’s International Operations, led a panel discussion on key industry issues, including determining the best use of excess capital in today’s marketplace.

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Insurance Companies Undervalued?: Companies in the reinsurance sector are trading at or near long term low valuations. This raises the question: Why are “strong buy” recommendations not more common? The answer may lie in the fact that, generally, analysts and investors are concerned about three important obstacles to returns on equity.

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Modeling the Impact of a Casualty Catastrophe: Look no further than today’s headlines to see how a single catastrophic event or lawsuit can have far-reaching effects. Over the past few years, several incidents, seemingly isolated, have ballooned into cross-border, cross-industry and cross-business line catastrophes. Chain reactions of liability — such as the Deepwater Horizon oil spill, the collapse of Lehman Brothers and the Chinese Drywall product recall — have led insurers to ask: How do I assess the impact of a major legal liability catastrophe on my portfolio? And it’s not just the industry waiting for an answer: stockholders, analysts, rating agencies and regulators are listening, too.

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Modeling Loss Reserve Risk: Loss reserves are essentially forecasts of losses that are going to be paid five, 10 and 15 years from now. Since the future cannot be predicted with perfect accuracy, reserves, of course, are difficult to estimate.

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September 23rd, 2010

World Catastrophe Reinsurance Market: Index to Links

Posted at 10:12 AM ET

worldcatthumbnail2010_thumbnailThe World Catastrophe Reinsurance Market 2010 report finds that surplus capital in the reinsurance market has been depressing prices, causing them to fall by 6 percent on average through the 2010 renewal season. Guy Carpenter estimates that the reinsurance market was overcapitalized by as much as USD20 billion, or 12 percent, at the beginning of 2010. While this amount came down to approximately 8 percent by the end of June, reinsurers’ excess capital continued to be the main driver of rate reductions at the 2010 renewals. If no market-changing event were to occur in the second half of the year, surplus capital is likely to remain the driving force behind continued rate softening at next year’s January 1 renewal, according to the study.

World Catastrophe Reinsurance Market: Part I, Introduction, Catastrophe Events >>

According to the Guy Carpenter World Rate on Line (ROL) Index, global catastrophe reinsurance rates fell by 6 percent on average through the 2010 renewal season. Although markets that suffered catastrophe losses in early 2010, such as Chile, saw prices increase, the underlying trend elsewhere was one of rate reductions. One of the main reasons for falling rates is excess capital in the reinsurance market. Guy Carpenter estimated that the sector was overcapitalized by as much as USD20 billion,or 12 percent, at the beginning of 2010. Although the overcapitalization fell back to around 8 percent by the end of June, the surplus capital among reinsurers remained the driving factor at the 2010 renewals.

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World Catastrophe Reinsurance Market: Part II, Impact on Reinsurance Market, Cat Bond Update >>

So what does all this mean for the reinsurance market and pricing? On the back of the heavy losses in the first half of 2010, reinsurers were hoping to see an end to the soft market and for prices to rise. However, Guy Carpenter data shows the high payouts have generally been insufficient to turn prices. According to the Guy Carpenter World ROL Index, global catastrophe reinsurance rates fell by 6 percent on average through the 2010 renewal season (see Figure 2) as surplus capital and capacity drove down prices. This rate decline followed an increase of 8 percent in 2009 and a fall of 10 percent in 2008.

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World Catastrophe Reinsurance Market: Part III, Catastrophe Model Developments, Impact of Changing Regulations

The increasingly complex nature of the reinsurance industry and the growth in alternative risk transfer instruments such as catastrophe bonds have reinforced the importance of catastrophe models and data management platforms in the risk management process. Such innovations have allowed (re)insurers to improve their understanding of natural perils while accurately estimating potential catastrophe losses to their portfolios and managing their exposures.

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September 22nd, 2010

World Catastrophe Reinsurance Market: Part III, Catastrophe Model Developments, Impact of Changing Regulations

Posted at 1:00 AM ET

Catastrophe Model Developments

The increasingly complex nature of the reinsurance industry and the growth in alternative risk transfer instruments such as catastrophe bonds have reinforced the importance of catastrophe models and data management platforms in the risk management process. Such innovations have allowed (re)insurers to improve their understanding of natural perils while accurately estimating potential catastrophe losses to their portfolios and managing their exposures.

Continue reading…