October 3rd, 2014

Week’s Top Stories: September 27 — October 3, 2014

Posted at 8:00 AM ET

TRIPRA Renewal Proposals: The Republican-led Financial Services Committee in the House of Representatives put forward a draft proposal outline to reauthorize the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) on May 1, 2014. After further negotiations, the House Republican leadership presented the TRIA Reform Act of 2014 on June 11 that proposes a five-year reauthorization of the federal program (to the end of 2019) with a similar copay structure to that of the Senate bill. The full senate passed their committee’s recommended version 93-4 on July 17, 2014. However, a number of changes have also been proposed that have the potential to impact the market if fully implemented, including higher program triggers for non-nuclear, biological, chemical and radiological (NBCR) events, an increase to the recoupment rate and an enhancement to the program’s taxpayer repayment requirements.

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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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Cyber, Terrorism and New Compensation Structures Highlighted as Critical Emerging Risks: Guy Carpenter published a new report highlighting emerging risks facing the (re)insurance sector, including cyber-attacks, terrorism and new compensation structures for long-term bodily injuries. The report seeks to identify and categorize these risks that are now confronting the sector, as well as analyze their implications on businesses and (re)insurers.

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Influx of New Capital Continues to Reshape the Reinsurance Market: Guy Carpenter published a new report focusing on the growth in the insurance-linked securities (ILS) market during the past year and some of the recent developments in catastrophe bond structure and risk transfer.

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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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And, You May Have Missed…

GC Videocast - Rendez-Vous Press Briefing 2014 (David Priebe) Capacity From New Sources: Focusing on the continuing supply of capacity from new sources, David Priebe, Vice Chairman, Guy Carpenter and Head of GC Securities, said: “Guy Carpenter estimates that the global property catastrophe limit exceeds US$300bn, with non-traditional reinsurance in the form of catastrophe bonds, collateralized reinsurance and industry loss warranties increasing from 14 percent last year to an estimated 16 percent this year. This is double the 8 percent of 2008.” Investor interest in such structures, he added, remained high during the period. “Strong investor demand meant placements were routinely over-subscribed, often by multiples of the targeted size.”

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