December 12th, 2014

Week’s Top Stories: December 6 — 12, 2014

Posted at 8:00 AM ET

Cyber-attacks and Terrorism Revealed as Top Emerging Risks for 2015, According to Annual Guy Carpenter Survey: Cyber-attacks and terrorism are ranked among the top emerging risks concerning the (re)insurance industry in the year ahead, according to a survey released by Guy Carpenter. According to the findings, new products, expansion into new geographic markets and access to new distribution channels will be the primary drivers of profitable growth in 2015.

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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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Chart: Rate Movements by Business Segment: Reports rate movements at January 1, 2014.

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Influx of New Capital Continues to Reshape the Reinsurance Market: Guy Carpenter has published a 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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And, You May Have Missed…

Reliance on TRIPRA: In 2012, there were over 850 insurers participating in the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA), writing over USD183 billion in premiums. Using the current 20 percent deductible requirement of TRIPRA and policyholder surplus as a filter, Guy Carpenter found that the smaller to mid-sized insurance carriers would be most affected should there be an increase in the deductible of any program that replaces TRIPRA. Without TRIPRA, insurers with less than USD300 million in surplus would likely need to incorporate additional private reinsurance market capacity to protect their capital and to satisfy rating agencies and regulators.

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Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd., which is authorized and regulated by the Financial Conduct Authority. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product. **GC Analytics is a registered mark with the U.S. Patent and Trademark Office.

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