Posts Tagged ‘Legislation’



September 14th, 2014

Cyber, Terrorism and New Compensation Structures Highlighted as Critical Emerging Risks

Posted at 10:30 PM ET

2014-sep-emerging-risk-cover-image-crGuy Carpenter today 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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September 11th, 2014

TRIPRA Renewal

Posted at 1:00 AM ET

Marsh & McLennan Companies (MMC), the parent company of Guy Carpenter, strongly supports the reauthorization and modernization of the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA). MMC and Guy Carpenter consider the Act to be a model public-private partnership that has provided affordable and widely available terrorism cover. Thankfully, thus far, the federal government has not made any payments under Terrorism Risk Insurance Act (TRIA) and its successors. Non-renewal or a major change in the program would almost certainly affect existing TRIPRA coverage, standalone terrorism pricing and TRIPRA captive programs. In addition, the workers compensation market would be severely impacted from a capacity, availability and pricing basis.

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September 10th, 2014

Reliance on TRIPRA

Posted at 1:00 AM ET

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 (see table below). 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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September 8th, 2014

US Terror Reinsurance Capacity

Posted at 1:00 AM ET

Guy Carpenter conducted a survey in the fourth quarter of 2013 with a number of reinsurers to help quantify the amount of terrorism reinsurance capacity that is currently available in the US market for all lines of business. At the market’s price, multiline terrorism reinsurance capacity is estimated to be approximately USD2.5 billion per program for coverages that include conventional weapon terrorism. Reinsurance capacity for coverages that include nuclear, biological, chemical or radiological (NBCR) is estimated to be approximately USD1 billion per program.

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September 4th, 2014

US Terror Risk Sector Capacity

Posted at 1:00 AM ET

Despite this increase in terrorism market capacity, it is not sufficient on its own to provide comprehensive terrorism cover in the United States. According to a Guy Carpenter (re)insurance capital study, dedicated global capital to the US (re)insurance market is estimated to be approximately USD700 billion (1). Catastrophe models that produce nuclear, biological, chemical or radiological (NBCR) event scenarios estimate losses from a large nuclear attack in Manhattan (at greater than USD900 billion) would likely exceed the total amount of capital in the US market (see figure below). The study consequently concludes that the (re)insurance sector does not have the capital necessary to withstand such a scenario. Some form of federal backstop is therefore needed if the private (re)insurance market is to continue to provide capacity to higher risk areas.

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September 3rd, 2014

Private Market Involvement in US Terror Risk Market

Posted at 1:00 AM ET

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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August 28th, 2014

US Terrorism Market: TRIPRA

Posted at 1:00 AM ET

The focus on the availability and affordability of terrorism (re)insurance coverage comes as the US House of Representatives and Senate are currently considering various changes to Terrorism Risk Insurance Program Reauthorization Act (TRIPRA). TRIPRA expires on December 31, 2014 and the future of the federal backstop is the headline issue within the terrorism market this year given that either substantial modification or non-renewal have the potential to impact terrorism coverage in the United States. The full Senate passed their committee’s recommended version 93-4 on July 17, 2014. The House of Representatives has yet to vote on their version. Implications could also be felt outside the United States. How the expiration of TRIPRA would affect the global terrorism market remains unclear but one possible outcome could see increased pressure on other pool structures to dissolve, resulting in fragmentation towards a more open market approach.

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August 27th, 2014

Government Pools Remain Integral Risk Management Tools

Posted at 1:00 AM ET

Terrorism pools have been set up by governments in a number of countries to mitigate the withdrawal of (re)insurance capacity from the private market following significant terrorism events. The pools were established in reaction to specific threats faced within each country. Each pool generally requires a formal declaration that a terrorist event has occurred to trigger coverage.

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August 13th, 2014

Domestic (Non-Islamic) Terrorism

Posted at 1:00 AM ET

Despite being overshadowed by the transnational Islamist terrorist threat since September 11, 2001, a number of destructive and costly attacks have been carried out by non-Islamic domestic groups and individuals. These include the Irish Republican Army (IRA) in the United Kingdom, Timothy McVeigh of the Oklahoma bombing in the United States and the Tamil Tigers in Sri Lanka. Such acts have resulted in significant property losses for (re)insurers. Indeed, as shown below, seven of the top ten most costly terrorist attacks (in terms of insured property losses) between 1990 and the first quarter of 2014 were carried out by these domestic groups.

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July 29th, 2014

Uncertain Future: Evolving Terrorism Risk, Executive Summary

Posted at 1:00 AM ET

The threat from terrorism has undergone significant change since the attacks of September 11, 2001. Heightened and more effective counter-terrorism activities in the following years have prevented repeat attacks on the scale of those carried out in New York and Washington D.C. Nevertheless, al-Qaeda and its affiliates, along with individuals inspired by the movement, still pose a significant threat to Western interests around the world as events over the last 18 months have shown.

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