Here we highlight recent GC Capital Ideas stories that have focused on casualty lines of business. 

Contingent Business Interruption: Life Support for Industry: Traditional insurance products are insufficient to address these increasingly complex challenges. The standard business interruption policy only indemnifies an insured for a reduction in revenue following damage at its own premises. Contingent business interruption is a generic term for extensions to the standard cover that provide for reduction in revenue as a result of damage at locations other than the insured’s own premises, whether it be suppliers or customers. In some cases insurers are providing cover on a “non-damage” basis, which protects against insolvency or political risk among an array of contingencies that might disturb the supply chain.

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Criminal Liability of Companies Under Spanish Law: What is the Real Impact on Directors & Officers Coverage? The financial crisis has triggered a number of criminal investigations against companies and their directors. In light of these developments, this section provides an overview of the recently introduced Spanish regulation concerning criminal liability of companies and the real impact this reform will have on directors and officers policies.

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Swiss Supreme Court: Scope of Ban on Retroactive Insurance: The current Swiss Insurance Contract Act (Versicherungsvertragsgesetz, VVG) prohibits retroactive insurance. Therefore, an insurance contract is usually void if the risk no longer exists or the feared event has already occurred before the contract is concluded (Article 9 VVG).

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Recent Trends

The financial crisis has triggered a number of criminal investigations against companies and their directors. In light of these developments, this section provides an overview of the recently introduced Spanish regulation concerning criminal liability of companies and the real impact this reform will have on directors and officers (D&O) policies.

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Employers Liability/General Casualty - United Kingdom:

Reinsurance rate reductions were achieved on accounts with good performance. Those accounts with a notable PPO exposure and where reinsurance purchasing was at a higher attachment point were subjected to higher volatility loadings.

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Directors & Officers

D&O reinsurance rates were flat slightly at the January 1, 2012, renewal, despite small rate increases on some primary and lower excess insurance layers in recent months. Pricing was more competitive on higher excess insurance layers and is down approximately 10 percent year over year. For 2012 modest price increases in primary and first excess insurance layers are likely, especially in light of rate changes over the past few months. Rate decreases on excess insurance layers will be smaller, resulting in a net flattening. Small and medium-sized businesses are likely to follow the same trajectory.

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Professional indemnity insurance original pricing remains stable, with occasional rate increases where premiums have been maintained on a reduced fee income or on those accounts impacted by adverse loss experience.

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David Lewin, Managing Director

Introduction

Directors and officers (D&O) insurance has grown steadily in popularity since it was introduced in Poland 15 years ago. Accompanied by a rise in risk-aware corporate leadership, D&O insurance has evolved from an unknown product in the mid-1990s to a near necessity during periods of economic instability.

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Click here to read the Executive Summary of Guy Carpenter’s report: Global Reinsurance Outlook: Points of Inflection; Positioning for Change in a Challenging Market >>

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Pricing for proportional and excess of loss programs were flat for directors and officers (D&O) reinsurance at the January 1, 2011 reinsurance renewal.

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David Lewin, Managing Director
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The worldwide economic downturn has had a huge effect on the Dutch economy. Many companies in the Netherlands face the risk of bankruptcy. In 2009 almost 11,000 enterprises were declared bankrupt, an increase of more than 51 percent compared with 2008. A similar number of companies are expected to enter bankruptcy in 2010. An even greater number of companies will be affected as they become entwined with the insolvencies of their contractual counterparties.

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In general, Directors & Officers (D&O) 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.

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