Archive for December, 2011



December 30th, 2011

Week’s Top Stories: December 24 - 30, 2011

Posted at 9:37 AM ET

2011 Catastrophe Update: Historical Global Losses, Cluster of Costly International Losses: 2011 has been an unusually eventful year for the (re)insurance sector. In addition to the challenging economic environment and major catastrophe model updates, (re)insurers were hit by an exceptional accumulation of global natural catastrophes. Two of the most damaging earthquakes in recent times struck Japan and New Zealand early in the year, causing huge losses. Several other significant events, including devastating floods in Thailand and Australia, a record breaking tornado season in the United States and Hurricane Irene making landfall along the U.S. east coast, combined to cause insured losses of around USD108 billion in 2011.

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Spatial and Temporal Earthquake Clustering: An Overview of EQECAT’s Perspective - Part I: Summary, Mega-thrust Earthquakes: The recent major earthquakes that have occurred in Chile (February 2010), New Zealand - Canterbury (September 2010), New Zealand - Christchurch (June 2011) and Tohoku (March 2011) have raised questions such as: Do earthquakes of major intensity cluster around the world? Have there been other, previous series of major earthquakes around the world? Are other major earthquakes more likely to occur in the very near future, if so where? These are all very challenging questions. This briefing begins to answer some of them.

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Marsh: Key Risk Management Issues in 2011: Marsh’s Risk Spotlight series are monthly briefs from some of Marsh’s top risk and insurance experts. We present here a compilation of all the 2011 stories. They covered a range of topics, starting with the role of data and analytics in our industry and ending with a focus on the ever-changing world of employee benefits. In between, Marsh sought to highlight innovations in such areas as catastrophe modeling trends, managing workers’ compensation costs, the implications of new government regulations and more.

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Risk Profile, Appetite and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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Top GC Capital Ideas Podcasts: Here we review our most popular GC Capital Ideas Podcasts entries of the last year.

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Most Popular Keyword: risk profile

 

And, you may have missed…

Defining the Value of Risk Management: How do you put a price on risk management? In the early days of finance theory (1950’s), the value of risk management was questioned-unless, of course, it was costless. The nuances of a more complex business environment have rendered this position untenable, but we still struggle to quantify the benefits of risk management, especially in the (re)insurance industry. Thus, the fundamental activity of risk-bearers has not been measurable, leaving a cloud of ambiguity in the middle of every carrier’s operation.

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December 30th, 2011

2011 Catastrophe Update: Historical Global Losses, Expensive Losses in the United States, Tropical Cyclones, Outlook for 2012

Posted at 1:00 AM ET

Expensive Losses in United States

Significant weather-related losses also occurred in the United States in 2011 after one of the worst tornado seasons on record caused a combined insured loss of around USD20 billion. The La Niña event helped create the necessary conditions for tornado formation (warm/humid air and strong south winds near the surface, with colder air and strong westerly winds in the upper atmosphere). A very strong jet stream also contributed to the favorable conditions. If considered a single event, the tornado losses in the second quarter would have ranked as the fourth most expensive disaster in U.S. history, according to the Insurance Information Institute.

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December 29th, 2011

2011 Catastrophe Update: Historical Global Losses, Cluster of Costly International Losses

Posted at 1:00 AM ET

2011 has been an unusually eventful year for the (re)insurance sector. In addition to the challenging economic environment and major catastrophe model updates, (re)insurers were hit by an exceptional accumulation of global natural catastrophes. Two of the most damaging earthquakes in recent times struck Japan and New Zealand early in the year, causing huge losses. Several other significant events, including devastating floods in Thailand and Australia, a record breaking tornado season in the United States and Hurricane Irene making landfall along the U.S. east coast, combined to cause insured losses of around USD108 billion in 2011 (1) .

Continue reading…

December 28th, 2011

Spatial and Temporal Earthquake Clustering: An Overview of EQECAT’s Perspective - Part II: Temporal Global Earthquake Clustering

Posted at 1:00 AM ET

Figure 2 shows the temporal chart of the mega-thrust earthquakes since 1900. The data show dramatic spikes in the global occurrence of these earthquakes. Clusters are schematically indicated by the green dashed curves.

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December 27th, 2011

Spatial and Temporal Earthquake Clustering: An Overview of EQECAT’s Perspective - Part I: Summary, Mega-thrust Earthquakes

Posted at 1:01 AM ET

The recent major earthquakes that have occurred in Chile (February 2010), New Zealand - Canterbury (September 2010), New Zealand - Christchurch (June 2011) and Tohoku (March 2011) have raised questions such as: Do earthquakes of major intensity cluster around the world? Have there been other, previous series of major earthquakes around the world? Are other major earthquakes more likely to occur in the very near future, if so where? These are all very challenging questions. This briefing begins to answer some of them.

Continue reading…

December 26th, 2011

Top GC Capital Ideas Podcasts

Posted at 1:00 AM ET

Here we review our most popular GC Capital Ideas Podcasts entries of the last year.

Succeeding Under Solvency II (David Lightfoot): We kick off our series of GC Capital Ideas daily stories on Solvency II with a Podcast interview with David Lightfoot. He discusses the movement of the implementation date of the regime, potential benefits and drawbacks of Solvency II to the reinsurance market, impact of Solvency II outside of Europe, Guy Carpenter’s expertise in helping clients succeed under Solvency II and Guy Carpenter’s new publication: Succeeding Under Solvency II.

Click here to access the Podcast >>

Macroeconomic Factors Impacting the Reinsurance Sector (David Flandro): Guy Carpenter Global Head of Business Intelligence David Flandro discusses the various macroeconomic forces currently impacting the reinsurance sector. The forces discussed in this new GC Capital Ideas podcast include the low interest rate environment, disinflation, capital position and European sovereign debt.

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December 23rd, 2011

Week’s Top Stories: December 17 - 23, 2011

Posted at 10:00 AM ET

Industry Good Practice for Catastrophe Modeling & Solvency II - A Perfect Opportunity for Review: Part I, Background and General Principles: The UK insurance industry, supported by the Association of British Insurers (ABI), has developed a report “Industry Good Practice for Catastrophe Modeling & Solvency II” to guide companies’ use of catastrophe modeling under Solvency II.

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Marsh: Key Risk Management Issues in 2011: Marsh’s Risk Spotlight series are monthly briefs from some of Marsh’s top risk and insurance experts. We present here a compilation of all the 2011 stories. They covered a range of topics, starting with the role of data and analytics in our industry and ending with a focus on the ever-changing world of employee benefits. In between, Marsh sought to highlight innovations in such areas as catastrophe modeling trends, managing workers’ compensation costs, the implications of new government regulations and more.

Read the article »

Guy Carpenter Examines Multi-Model Approach in New Report on Managing Catastrophe Model Uncertainty: Guy Carpenter & Company published a new report on the effective use of property catastrophe models by property insurers. The report addresses the merits of adopting a multi-model approach to estimate risk and control uncertainty.

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Risk Profile, Appetite and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article »

Update: Floods in Thailand: Thailand has experienced its worst flooding in years over the last few months, leaving more than 420 people dead and causing severe damage across northern and central regions of the country. The floods have severely damaged and disrupted manufacturing operations in Thailand. Flooding has forced at least seven huge industrial estates in central regions to close, prompting the Federation of Thai Industries to warn that damage to the industrial sector will be in the billions of dollars.

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Most Popular Keyword:  solvency ii

 

And, you may have missed…

The Adverse Development Super-Catastrophe: Property catastrophes make the news. Tangible and visual, the carnage can be conveyed with ease, and all can grasp the direct implications immediately. Yet for (re)insurers, there’s another type of catastrophe that could be far more destructive to balance sheets. This threat, which can remain hidden in a portfolio for decades, can arise with little warning and have profound consequences.

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December 22nd, 2011

Marsh: Key Risk Management Issues in 2011

Posted at 1:00 AM ET

Marsh’s Risk Spotlight series are monthly briefs from some of Marsh’s top risk and insurance experts. We present here a compilation of all the 2011 stories. They covered a range of topics, starting with the role of data and analytics in our industry and ending with a focus on the ever-changing world of employee benefits. In between, Marsh sought to highlight innovations in such areas as catastrophe modeling trends, managing workers’ compensation costs, the implications of new government regulations and more.

Continue reading…

December 21st, 2011

Industry Good Practice for Catastophe Modeling & Solvency II – A Perfect Opportunity for Review: Part III, How GC Analytics® Can Help

Posted at 1:00 AM ET

Model Suitability Analysis

Knowing the importance to our clients of understanding and applying catastrophe models in a robust way, GC Analytics has devised a unique service proposition: model suitability analysis (MSA). With this service, our clients gain a superior informed position when deciding how to reflect the catastrophe risk of a portfolio within their risk management frameworks. The service can be comprehensive and generally includes:

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December 20th, 2011

Industry Good Practice for Catastophe Modeling & Solvency II – A Perfect Opportunity for Review: Part II, Operational Principles and Technical Considerations

Posted at 1:00 AM ET

Section 2 - Operational Principles

The message that data quality is vital to catastrophe modeling comes through loud and clear in the opening of Section 2. The old adage “garbage in, garbage out” is much abused, but in catastrophe modeling it has certainly earned a place. Companies should be cognizant of the impact that data manipulation has on the results produced by models. As a result, sensitivity testing should become much more prominent. Data should be tested for accuracy, completeness and appropriateness, along with a wide range of assessments employed in terms of spatial, temporal and thematic qualities. Missing and incorrect data should be accounted for through appropriate “grossing up” techniques, which should be documented in a formal data policy. Much of this will be second nature to firms that have used catastrophe models for any period of time, but we believe there will be a few “root and branch” reviews of systems and data capture processes for companies that have recognized data issues.

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