September 5th, 2014

Week’s Top Stories: August 30 — September 5, 2014

Posted at 8:00 AM ET

Private Market Involvement in US Terror Risk Market: Prior to September 11, 2001, coverage for terrorism-related losses was generally included in standard catastrophe reinsurance agreements without specific charges. However, the USD20 billion loss that reinsurers paid out following the September 11, 2001 attacks prompted companies to quickly exclude terror coverage in standard agreements for most lines of business. Terrorism exclusions therefore became standard in catastrophe reinsurance programs at the January 1, 2002 renewal, seriously diminishing the availability of terrorism reinsurance capacity. Concerned that the lack of terrorism coverage would hit the American economy, the US Congress passed the Terrorism Risk Insurance Act (TRIA) into law in November 2002.

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July 1 Renewals Reveal Continued Double Digit Price Decreases Across Many Lines and Geographies: Guy Carpenter reports that market pressures at July 1 renewals continued to drive price decreases across virtually all geographies and lines of business, many in the double digit range. As loss activity remained minimal, reinsurers added to surplus capacity and additional capital continued to come into the market via alternative sources.

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Guy Carpenter Launches Probabilistic European Hail Model: Guy Carpenter launched its new leading-edge probabilistic hail model for Europe. The G-CAT® Hail Model features a unique approach to producing historic hail tracks using a lightning detection system developed for Guy Carpenter by atmospheric research firm nowcast GmbH.

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Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line index is presented for 1990 through 2014.  The index fell by 11 percent at January 1, 2014.

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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 (ERM) 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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And, You May Have Missed… 

GC Videocast - MENA Insights: Dr. Cherif Chentir, Chief Underwriting Officer from SCOR SE: In our first MENA Insights interview, Dr. Cherif Chentir, Chief Underwriting Officer, Middle East, South Eastern Europe, Greece, Cyprus, Malta, SCOR SE, talks about the mega-projects taking place in the region and his belief that insurance penetration can only move in one direction. He looks back over his long career and charts the development of a market that has changed beyond all recognition.

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