Archive for July, 2012



July 31st, 2012

European Motor at the July 1 2012 Reinsurance Renewal

Posted at 1:00 AM ET

United Kingdom:

Reinsurance rates continued to harden following the reduction in excess of loss capacity available, as evidenced in the January 1, 2012, renewals, with periodical payment orders (PPOs) an increasing concern for reinsurers. Rate increases were targeted at the layers excess of GBP5 million, with increases in the 20 percent to 30 percent range the norm rather than the exception.

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July 30th, 2012

Workers Compensation at the Jul 1 2012 Reinsurance Renewal

Posted at 1:30 AM ET

bueler_aaron_gcciAaron Bueler, Managing Director
Contact

Rate increases and an apparent decrease in the use of carrier discounting were encouraging signs for an improving market. However, other headwinds remained - depressed investment rates, reserve development, medical trend (including pharmacy) and slow job growth were still major challenges to the industry. The workers compensation line is still struggling with profitability.

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July 27th, 2012

Week’s Top Stories: July 21 - 27, 2012

Posted at 10:30 AM ET

July 1 Reinsurance Renewals Reveal Plentiful Capacity amid Benign Catastrophe Activity, According to Guy Carpenter: Reinsurance renewals took place against a backdrop of plentiful capacity at July 1, 2012. Capital has continued to strengthen through the second quarter of 2012, moderating pricing pressures, according to a briefing released today by Guy Carpenter.

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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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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 (XL) 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 XL reinsurance contracts of European cedents.

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Standard & Poor’s Proposed Insurance Rating Criteria Update: On July 9, 2012, Standard & Poor’s (S&P) issued a Request for Comment on proposed changes to its criteria for rating insurance companies globally. Although S&P expects the overall impact on global ratings to be modest, the proposed changes are significant and may adversely affect individual rated (re)insurers. The new criteria are expected to be published in late 2012 or early 2013.

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Top Solvency II Stories in GC Capital Ideas:  Here we highlight GC Capital Ideas’ recent top stories covering the evolving Solvency II capital requirements regime.

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Most Popular Keyword:  2012 catastrophe pricing outlook

 

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Industry Issues and Trends: Terrorism Insurance: Costs Decrease as Insurance Increases: The perception of an elevated potential for terror attacks remains high. Meanwhile security breaches via WikiLeaks are providing a roadmap to crucial sites exposed to terrorism. The risk of terrorism remains a critical challenge for companies and for the broader population. The attempted attacks on Times Square in New York in May 2010 and the Detroit-bound flight on Christmas 2009 are reminders of the ongoing risk.

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July 26th, 2012

Umbrella and Excess at July 1, 2012 Reinsurance Renewal

Posted at 1:00 AM ET

Primary insurance rates in umbrella and excess were up 4 to 5 percent in the first six months of 2012. The upward rate movement began during the latter part of 2011 and is continuing into 2012. Entering 2012, we expected continued rate improvement depending on the exposure, size of the insured and loss activity. Individual accounts (and certain classes of business such as energy, transportation and some contracting business) are seeing higher-than-average rate increases of low double-digits in some cases. With limited ability to generate investment returns coupled with a number of years of primary insurance rate reductions, increase in exposure bases due to a slowly recovering economy and loss trends, carriers are pushing prices higher.

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July 25th, 2012

Credit Reinsurance at July 1, 2012 Reinsurance Renewal

Posted at 1:00 AM ET

Credit reinsurance rates were flat, which, when applied to a rising income base and exposures that were up approximately 20 percent, resulted in a marked reduction in a rate (premium) on exposure measurement. Other than some relatively isolated incidents, an absence of major losses hitting excess of loss covers sustained successive years’ premium reductions. The vast majority of reinsurance is transacted on proportional basis and there have been significant increases in ceding commission. Some markets saw a third successive year of ceding commission increases.

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July 24th, 2012

Aviation at July 1, 2012 Reinsurance Renewal

Posted at 1:00 AM ET

At the July 1, 2012, renewal, the major risk sector of the aviation reinsurance market showed a reduction on pricing of 3 percent to 5 percent on a “like for like” exposure basis. Renewals with increased exposure saw pricing in a range of flat to a small increase. The major risk sector includes airline and aerospace covers.

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July 23rd, 2012

Global Marine & Energy at July 1 Reinsurance Renewal

Posted at 1:00 AM ET

In general terms primary rates on global marine and energy covers were flat. Despite the relatively recent large losses that occurred even energy rate increases tailed off somewhat. There were no specific moves to increase primary rates, which filtered through to marine reinsurance placements, where individual accounts were treated on case by case bases. There did not appear to be any particular areas where reductions were seen. These only occurred if there were specific extenuating circumstances. Marine ILW contracts were one area where pricing and attachment levels increased, primarily driven by the Costa Concordia loss. The original loss reserve recently increased to the USD1 billion level.

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July 20th, 2012

Week’s Top Stories: July 14 -20, 2012

Posted at 10:30 AM ET

July 1 Reinsurance Renewals Reveal Plentiful Capacity amid Benign Catastrophe Activity, According to Guy Carpenter: Reinsurance renewals took place against a backdrop of plentiful capacity at July 1, 2012. Capital has continued to strengthen through the second quarter of 2012, moderating pricing pressures, according to a briefing released today by Guy Carpenter.

Read the article >>

Standard & Poor’s Proposed Insurance Rating Criteria Update: On July 9, 2012, Standard & Poor’s (S&P) issued a Request for Comment on proposed changes to its criteria for rating insurance companies globally. Although S&P expects the overall impact on global ratings to be modest, the proposed changes are significant and may adversely affect individual rated (re)insurers. The new criteria are expected to be published in late 2012 or early 2013.

Read the article >>

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 >>

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 (XL) 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 XL reinsurance contracts of European cedents.

Read the article >>

Reinsurance Rates Rise at April 1, 2012 Renewals: Reinsurance rates rose as the market continues to work through the impact of the events of 2011, according to Guy Carpenter. In a briefing released today, Guy Carpenter reports that this year’s April 1 renewals are continuing the general trends observed at January 1, 2012.

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Most Popular Keyword:  periodic payment orders

 

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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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July 19th, 2012

Life, Accident and Health Renewal at July 1, 2012

Posted at 1:00 AM ET

rains_david_141pxDavid Rains, Managing Director
Contact

Medical

While most renewal activity in this segment occurs at January 1, subsequent placements confirm that a highly competitive market exists for medical reinsurance. Capacity was rational but ample, with incumbents often renewing aggressively to avoid losing the business. Beyond competitive pricing, reinsurers looked to add greater value through their claims expertise or specialty network access.

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July 18th, 2012

Catastrophe Bonds* at July 1, 2012

Posted at 1:00 AM ET

Catastrophe bonds continue to play an increasingly important role in the property catastrophe risk transfer market with particularly robust issuance levels. During the first six months of 2012, 15 transactions came to market, totaling USD3.4 billion of risk principal. In terms of risk principal, this is a 113 percent increase relative to the first half of 2011. Risk principal outstanding now stands at USD13.5 billion, within striking distance of the high water mark of USD14 billion established in 2007 after the post-Katrina-Rita-Wilma issuance surge.

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