Archive for December, 2012



December 28th, 2012

Week’s Top Stories: December 22 - 28, 2012

Posted at 10:30 AM ET

Future of TRIPRA and Implications on the (Re)Insurance Market: There are now limited expectations of terrorism insurance being addressed in Congress before TRIPRA’s expiration in 2014. If TRIPRA is not extended or is substantially modified, there will be an impact on embedded terrorism insurance coverage, standalone terrorism pricing/demand for capacity and TRIPRA captive placements.

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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 >>

 

Thailand Flood 2011: Executive Summary: In 2011, Thailand experienced its worst flooding in years, leaving more than 800 people dead and causing severe damage across northern and central regions of the country. The floods, lasting a few months, severely damaged and disrupted manufacturing operations in Thailand. Flooding also forced seven huge industrial estates in central regions to close, causing damage to the industrial sector in the billions of U.S. dollars. It is interesting to note that prior to 2011, none of the industrial parks in Thailand had been flooded over the past 40 years.

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Superstorm Sandy: Initial Impacts and Implications: As documented by the National Hurricane Center (NHC), Superstorm Sandy made landfall as a post-tropical cyclone at 8PM EDT, Monday Oct 29, 2012, with maximum sustained winds of 80 miles per hour.

Read the article >>

 

Guy Carpenter Publishes Second Annual Insurance Risk Benchmarks Report: Guy Carpenter has published its second annual Insurance Risk Benchmarks, a resource designed to help insurers assess risk parameters and improve economic capital modeling. The report provides benchmarks for underwriting and reserve risk by line of business and by industry segment for U.S. exposures, and can be used by insurers when benchmarking their economic capital models.

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Most Popular Keyword:  co-tvar

 

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Guy Carpenter Opens New Office in DIFC, Dubai: Guy Carpenter & Company has opened its first office in the Middle East and has received a license from the Dubai Financial Services Authority (DFSA) to operate as an insurance intermediary in the Dubai International Financial Centre (DIFC).

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December 25th, 2012

GC Capital Tip: Share Your Favorite Articles

Posted at 1:00 AM ET

Did you find a story on GC Capital Ideas to be particularly useful? Let your colleagues know. “Social bookmarking” has become popular, with internet users flagging the articles they find most helpful. You can “socially bookmark” articles on GC Capital Ideas in a few simple steps. At the bottom of every article, you’ll see a button that says, “Share.” Click it, and look for your preferred social bookmarking website, for example, LinkedIn. If you aren’t registered with one of these sites, you’ll be prompted to do so (which doesn’t take long). Then, just log in, and label your favorite articles from GC Capital Ideas.

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December 24th, 2012

Future of TRIPRA and Implications on the (Re)Insurance Market

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President, Lucy Dalimonte, Senior Vice President, Ellen Rieder, Managing Director and Emma Karhan, Senior Vice President
Contact

There are now limited expectations of terrorism insurance being addressed in Congress before TRIPRA’s expiration in 2014. If TRIPRA is not extended or is substantially modified, there will be an impact on embedded terrorism insurance coverage, standalone terrorism pricing/demand for capacity and TRIPRA captive placements.

Continue reading…

December 21st, 2012

Week’s Top Stories: December 15 - 21, 2012

Posted at 10:15 AM ET

Terrorism (Re)Insurance Market Today: The unrest around the world outlined earlier in the report has begun to impact the terror (re)insurance market, not only with regard to supply and demand but also in terms of how risks and coverages are defined. Although there is an abundance of capacity in the market due to the absence of a recent major terrorism loss (resulting in a stable to softening treaty terrorism market), civil unrest and/or riot coverages in some international terrorism programs are impacting several carriers.

Read the article >>

 

Guy Carpenter Opens New Office in DIFC, Dubai: Guy Carpenter & Company has opened its first office in the Middle East and has received a license from the Dubai Financial Services Authority (DFSA) to operate as an insurance intermediary in the Dubai International Financial Centre (DIFC).

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 >>

 

Guy Carpenter Publishes Second Annual Insurance Risk Benchmarks Report: Guy Carpenter has published its second annual Insurance Risk Benchmarks, a resource designed to help insurers assess risk parameters and improve economic capital modeling. The report provides benchmarks for underwriting and reserve risk by line of business and by industry segment for U.S. exposures, and can be used by insurers when benchmarking their economic capital models.

Read the article >>

 

Thailand Flood 2011: Executive Summary: In 2011, Thailand experienced its worst flooding in years, leaving more than 800 people dead and causing severe damage across northern and central regions of the country. The floods, lasting a few months, severely damaged and disrupted manufacturing operations in Thailand. Flooding also forced seven huge industrial estates in central regions to close, causing damage to the industrial sector in the billions of U.S. dollars. It is interesting to note that prior to 2011, none of the industrial parks in Thailand had been flooded over the past 40 years.

Read the article >>

 

Most Popular Keyword:  reinsurance catastrophes in the US

 

And, you may have missed…..

Adapting to an Evolving Market of More Permanent Capital Market Capacity: A new capital management paradigm is challenging the traditional reinsurance model. Historically, significant market losses from major catastrophic events and low investment yields were a catalyst for an improved rate environment. Faced with current economic conditions, reinsurers are finding it more difficult to generate adequate returns in excess of their cost of capital, and are seeing an increased competitive threat from alternative capacity from the capital markets.

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December 20th, 2012

Terrorism Risk Insurance Act (TRIA)

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President, Lucy Dalimonte, Senior Vice President, Ellen Rieder, Managing Director and Emma Karhan, Senior Vice President
Contact

The future of the federal terrorism insurance backstop continues to dominate the U.S. terrorism (re)insurance market. Despite the reduced risk of a spectacular terrorist attack on the scale of the September 11, 2001, attacks, extremists continue to pursue attacks on U.S. soil and (re)insurers are therefore lobbying to extend the Terrorism Risk Insurance Program Reauthorization Act of 2007 (TRIPRA). The program is currently due to expire in December 2014 and there is considerable uncertainty at this time as to whether Congress will renew the program or how it may propose to alter its structure. Should TRIPRA not be renewed or if substantial changes are made to the program, it may impact primary commercial lines writers and their ability to provide the same terrorism insurance limits currently offered today. Without TRIPRA, some insurers could withdraw from certain geographical areas or may actually exit lines of business, for example, workers’ compensation.

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December 19th, 2012

Government Terrorism Pools

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President, Lucy Dalimonte, Senior Vice President, Ellen Rieder, Managing Director and Emma Karhan, Senior Vice President
Contact

To help (re)insurers manage the global terrorist threat, terrorism reinsurance pools have been created in a number of countries. The pools were established in reaction to the specific threats faced within each country, and each pool generally requires a declaration by the national government that a terrorist event has occurred to trigger coverage. In the countries where compulsory or optional terrorism reinsurance pools exist, property insurance policies can be extended to include terrorism coverage in accordance with the local pool. In such situations, any standalone terrorism and sabotage policy would be issued as difference in conditions (DIC) and difference in limits (DIC/DIL) of the locally issued property policy.

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December 19th, 2012

Guy Carpenter Opens New Office in DIFC, Dubai

Posted at 12:10 AM ET

Guy Carpenter & Company has opened its first office in the Middle East and has received a license from the Dubai Financial Services Authority (DFSA) to operate as an insurance intermediary in the Dubai International Financial Centre (DIFC).

Continue reading…

December 18th, 2012

Terrorism (Re)Insurance Market Today

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President, Lucy Dalimonte, Senior Vice President, Ellen Rieder, Managing Director and Emma Karhan, Senior Vice President
Contact

The unrest around the world outlined earlier in the report has begun to impact the terror (re)insurance market, not only with regard to supply and demand but also in terms of how risks and coverages are defined. Although there is an abundance of capacity in the market due to the absence of a recent major terrorism loss (resulting in a stable to softening treaty terrorism market), civil unrest and/or riot coverages in some international terrorism programs are impacting several carriers. Indeed, the dramatic increase in global unrest has caused an increased frequency of localized or territory-specific losses in the facultative reinsurance market.

Continue reading…

December 17th, 2012

Evolving Risk and Changing Nature of Coverage; Terrorism Coverage and Related Wordings

Posted at 1:00 AM ET

David Flandro, Global Head of Business Intelligence, Julian Alovisi, Assistant Vice President, Lucy Dalimonte, Senior Vice President, Ellen Rieder, Managing Director and Emma Karhan, Senior Vice President
Contact

Since the devastating terrorist attacks of September 11, 2001, the (re)insurance sector has focused primarily on the potential for similar attacks in major metropolitan areas around the world. The threat posed by transnational terrorists, and al-Qaeda in particular, has dominated (re)insurers’ approach to terrorism risks. However, as described in Section 1 of this report, the nature of the terrorist threat has evolved in recent years. The core al-Qaeda group has been weakened by the deaths and arrests of several key leaders and improved counter-terrorism strategies. These developments have hindered al-Qaeda’s ability to launch spectacular attacks in the United States and other Western nations and prompted regional affiliate groups to independently strengthen and increasingly target Western interests around the world.

Continue reading…

December 14th, 2012

Week’s Top Stories: December 8 - 14, 2012

Posted at 3:54 PM ET

Identifying New and Emerging Risks: By utilizing such information, (re)insurers have improved their awareness of the threat posed by terrorists. Although there are significant challenges when attempting to predict and react to events, companies continue to seek to identify new risks as they arise.

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Guy Carpenter Asia-Pacific Climate Impact Centre Issues Predictions of Tropical Cyclone Activity in Australian Region: Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of Guy Carpenter & Company and City University of Hong Kong, issued its annual predictions for the 2012/2013 tropical cyclone season for the Australian region. The final forecast is for near-normal activity (12 tropical cyclones) for the region.

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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 >>

 

Guy Carpenter Publishes Second Annual Insurance Risk Benchmarks Report: Guy Carpenter has published its second annual Insurance Risk Benchmarks, a resource designed to help insurers assess risk parameters and improve economic capital modeling. The report provides benchmarks for underwriting and reserve risk by line of business and by industry segment for U.S. exposures, and can be used by insurers when benchmarking their economic capital models.

Read the article >>

 

Superstorm Sandy: Initial Impacts and Implications: Guy Carpenter has published a new briefing: Superstorm Sandy: Initial Impacts and Implications. As documented by the National Hurricane Center, Superstorm Sandy made landfall as a post-tropical cyclone at 8PM EDT, Monday, Oct 29, 2012, with maximum sustained winds of 80 miles per hour.

Read the article >>

 

Most Popular Keyword:  cwil reinsurance

 

And, you may have missed…..

Resilient Capital Levels: Another driver of low valuations has been sector book value or capital growth (the denominator in the price-to-book ratio). Figure 1 shows the increase in reported capital since the middle of 2011 for the Guy Carpenter Reinsurance Composite. This growth has been particularly impressive as the sector experienced an exceptional series of costly catastrophe losses during this time.

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