October 15th, 2010

Week’s Top Stories: October 9 - October 15, 2010

Posted at 10:00 AM ET

Toxic Industrial Spill, Ajka Hungary:  A toxic sludge that poured from a reservoir at an aluminium plant in the Hungarian town of Ajka has killed eight people after more than 700,000 million cubic meters (25 million cubic feet) of industrial waste inundated surrounding towns and villages and contaminated rivers. Officials said a dam wall at the Ajka Timföldgyár plant was breached on October 4, unleashing a two meter (6.5 foot) wave of red sludge that affected 41 square kilometers (16 square miles) of land, including the villages of Kolontar, Devecser and Somlovasarhely. Hungary’s government declared a state of emergency in three western counties of the country after property and infrastructure were damaged. Around 150 people were injured in what officials are describing as Hungary’s worst-ever chemical accident. Those who lost their lives are believed to have drowned and several burns and eye ailments were reported among the injured.

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Guy Carpenter Establishes New Florida Business Unit: Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist and part of the Marsh & McLennan Companies, today announced the formation of a dedicated Florida business unit. The Florida unit will be led by Kevin Stokes, Executive Vice President, who will report to Chris McKeown, President and CEO of North America Broking Operations.

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World Catastrophe Reinsurance Market: The 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.

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Continental European Legislative and Judicial Trends: Statistical Improbability Not Sufficient to Rebut Claim for Car Theft Under Motor Policy in Sweden: It is a well known fact that fraudulent insurance claims create very serious and costly problems for European insurance companies, including those in Sweden. Perhaps efforts by insurers to fight fraudulent claims occasionally have gone too far. Obviously the Courts agreed in a recent judgment handed down by the Svea Court of Appeal (Sw. Svea hovrätt), in which it was held that statistical improbability of a car theft was not, per se, sufficient to rebut a claim under a motor policy.

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Hurricane Paula: Paula developed on October 11 and strengthened to become the ninth hurricane of the 2010 Atlantic hurricane season at 09:00 today (October 12), according to the National Hurricane Center (NHC). Paula is currently located approximately 230 miles (370 kilometers) south-southeast of Cozumel in Mexico and packs sustained winds of around 75 mph (120 kmph). The storm is traveling in a northwesterly direction and a gradual turn to the north-northwest is expected over the next 24 hours. On this forecast track, Paula is expected to approach the east coast of the Yucatan Peninsula in Mexico tonight and tomorrow while strengthening. The NHC said hurricane-force winds extend 10 miles (20 kilometers) from the center of the storm while tropical storm-force winds extend 60 miles (95 kilometers).

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Most Popular Keyword:   insurance losses in 2009

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2009 Catastrophe Update:   Global Insured Losses in 2009: 2009 has seen an impressive recovery from last year’s financial crisis and the uncertainty caused by losses from Hurricane Gustav and Hurricane Ike. This recovery has been driven by the easing of financial markets and low catastrophe activity. A very quiet hurricane season, coupled with relatively low losses for other weather-related events, meant insured losses reached USD24 billion in 2009, the lowest figure since 2006 and a significant fall from USD52.5 billion in 2008.

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