The January 2010 renewal season in France was characterized by stability, available capacity, low loss activity and strong competition. The lines where capacity was limited were credit and medical malpractice, the later impacted by distressed/heavy risks. Excess of loss (XOL) property cat business with losses showed average rate increases of 10 percent mainly on the low layers (hit by Windstorm Klaus), but changes were flat on the top layers. Change was also flat for business with no losses. XOL property risk business showed no changes for programs with losses and an average rate decrease of 5 percent for programs without losses. Cedents continue to move retention levels to keep reinsurance spend flat. No model changes occurred during the year, but Klaus did generate model recalibration activity.

Asia Pacific buyers are generally not affected by the same degree of falling original demand that has been experienced in Europe and North America. But reinsurance price competition is still strong and buyers with a clean record were able to secure reductions. Overall the price picture was mixed, because against the background of a market that is softening, there was significant loss activity in several territories during 2009, particularly in the Philippines and Indonesia. Buyers who received reinsurance recoveries in 2009 faced increases at renewal. In Australia an early renewal saw clients achieving risk adjusted rate reductions of up to 10 percent.

Continue reading…

Aaron Bueler, Managing Director and Emil Metropoulos, Senior Vice President 

With both the indemnity and medical severity components continuing to rise, the cost of workers compensation insurance remains a top concern for all employers, despite favorable trends in reduced claim frequency. The recession has further put pressure on wages that are being outpaced by indemnity inflation. Workers compensation medical inflation also continues to grow faster than the Medical Consumer Price Index. Despite these trends, primary workers compensation writers remained competitive by either keeping rates flat or granting reductions up to 5 percent on premium rates. Insurers attempted to write new business to offset lost premium caused by exposure decreases across their portfolios.

Continue reading…

Property lines price changes were flat in the Portugal market. Motor and Marine excess of loss lines without losses were notable for their average price increases in a range from 15 percent to 25 percent. Earned premium income is still decreasing due to the economic recession. Capacity is readily available and consolidation is increasing the already high market concentration and competitiveness.

A super cell thunderstorm battered Melbourne and its suburbs on March 6, causing severe damage to homes, businesses and vehicles from Flemington to Ferntree Gully. The storm system brought winds of up to 100 kmph (60 mph) to the region and dumped hailstones that measured around 100 mm (4 inches) in diameter, according to the Australian Bureau of Meteorology (BoM). Flash flooding was also reported as up to 45 mm (1.8 inches) of rain fell in around 30 minutes. Reports said Melbourne’s entire metropolitan area was hit by the severe weather, with officials saying the city’s eastern and southeastern areas were particularly badly affected, including Ferntree Gully, Knox, Lysterfield and Scoresby. The western suburbs of Melton and Essendon were also badly hit. No deaths or serious injuries were reported.

Continue reading…

Average rate changes at the Spain renewals encompassed a wide range, from increases of 25 percent to declines of 10 percent. Some lines experienced no changes while the property line saw most of the significant rate changes. Excess of loss (XOL) Property business with losses showed average rate increases of 25 percent that mainly resulted from Windstorm Klaus effects. Average rates declined slightly on Property Risk business with losses and declined from 4 percent to 10 percent on Property Risk business without losses. Primary insurers increased retentions on XOL Property per event programs to reduce the impact of the rate increases. Marine rates showed little change from the large increases of the prior year’s renewal. Capacity problems were not an issue in this highly competitive market.

Simon Hayes, Managing Director
Contact

The 2008-2009 global financial crisis had a significant impact on insurers in the engineering and construction sector. Many large and small Contractors All Risk (CAR)/Erection All Risk (EAR) single projects around the world were either cancelled or suspended due to lack of available financing. These developments have caused insurers’ income from construction projects to shrink. Insurers see a need to expand into other classes, such as annuals, power and breakdown.

Continue reading…

Don Mango, Chief Actuary
Contact

We were all thrilled with the spectacle of the just-completed 2010 Olympic Winter Games from Vancouver. Winter sports are known for their inherent high levels of riskiness, so it should not be too surprising that some valuable lessons related to “personal risk management behavior” can be drawn from the way the athletes make decisions and how the competitions are conducted and judged. As risk professionals, when we watch the action on the snowy mountains and icy rinks, we can get another view on the choices made in the taking of risk or in mitigating risk. Here are just a few lessons that offer additional insights:

Continue reading…

A powerful Atlantic storm named Xynthia battered western Europe with hurricane-force winds, surging seas and driving rain on February 27 and 28, causing widespread property damage and severely disrupting transport networks and infrastructure. The most severe damage was predominantly seen in western France, though disruption was reported across several countries in western Europe. Reports said at least 64 people were killed across France, Germany, Spain, Portugal and Belgium, and more than 1 million households lost power at the height of the storm. At least 53 of the fatalities occurred in France, which was the country worst-affected by the windstorm.

  Continue reading…

Windstorm Xynthia: A powerful Atlantic storm named Xynthia battered Western Europe with hurricane-force winds, surging seas and driving rain on February 27 and 28, causing widespread property damage and disrupting transport networks. According to recent estimates, the storm has left at least 56 people dead across France, Germany, Spain, Portugal and Belgium, and more than 1 million households have been left without power. At least 47 of the fatalities have occurred in France, which has been the country worst-affected by the windstorm.

Read the article »

Directors and Officers Renewals - Stabilization in Pricing: In general, Directors & Officers insurers continued to experience some stabilization in pricing and a normalization of exposure in both the Commercial and Financial Institutions segment. For commercial risks with attractive risk profiles, the market remained competitive with average primary rate changes ranging from flat to a decline of 8 percent. After two years of dramatic rate increases, the financial institution segment showed signs of moderation as rate increases slowed.

Read the article »

8.8 Mw Earthquake in Chile: A massive earthquake struck off the coast of Maule in Chile at 6:34 UTC on February 27, causing severe damage across of the country and claiming more than 700 lives in Chile’s biggest earthquake for around 50 years. The earthquake, measuring 8.8 Mw, was located 60 miles (100 kilometers) north-northwest of Chillan and 200 miles (325 kilometers) southwest of Santiago, according to the US Geological Survey (USGS). The USGS added that the quake was centered about 21.7 miles (35 kilometers) underground and was felt in Argentina. This is the joint fifth largest earthquake ever to be recorded, according to the USGS. Around 150 aftershocks have hit the region since the main earthquake, the most powerful at 6.9 Mw.

Read the article »

Errors & Omissions Insurance at the January Renewals: Anticipating that the recent economic downturn, as it had in prior occurrences, would result in increased claims activity, primary insurers sought rate increases. The highly competitive market environment prevented them from realizing the increases. Primary E&O rate reductions continued downward in 2009, averaging declines between 5 percent and 10 percent for insureds exhibiting no material change in exposure and loss activity. Certain sub-segments, such as small to mid-sized law firm business, are indicative of the highly competitive landscape of the E&O segment.

Read the article »

UK Property Jan 1 Renewals: UK average rate changes ranged from declines of 15 percent to flat. Excess of loss cat rates declined by 5 percent to 10 percent. Property Fire Risk rate changes ranged from declines of 15 percent to flat, with variations determined by loss experience. Risk pricing will continue to be under pressure and the market competitive as long as the primary market continues to see depressed rating levels. The Reinsurance Property lines have been profitable over time, but because the UK falls into reinsurers’ peak Northern European Cat zone, capacity is usually finite.

Read the article »

Most Popular Keyword:     xynthia

And, you may have missed …

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 (XOL) 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 XOL reinsurance contracts of European cedents.

Read the article »

Click here to register for e-mail updates from GC Capital Ideas »