Chris Klein, Director of Reinsurance Markets
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Casualty

US Casualty

At the July 1 renewals the US casualty lines continued to demonstrate a soft pricing environment with few changes seen from the prior renewals in the year. The direct market showed a general improvement in profitability as underwriting results and net investment gains increased. This occurred as premiums declined, further impacting a soft reinsurance pricing environment. A recent development is a slowing in the decline of the subject premium base for many casualty lines. It appears to be stabilizing (even increasing in some lines) as a result of the recovering economy.

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David Lewin, Managing Director
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In a judgment handed down on October 27, 2009 (VI ZR 296/08) and subsequently published, the Federal High Court of Justice in Germany (Bundesgerichtshof, in the following, “High Court”) seized the opportunity to restate the basic principles of liability for athletic injury. Also, the High Court ruled on several interesting legal items generated by the existence or non-existence of insurance protection in this context.

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David Lewin, Managing Director
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In France, construction operations are subject to tight regulations that provide for strict liability under Article 1792 ff. of the Civil Code. Under the Loi Spinetta of 1978, they are also subject to two types of compulsory insurance coverage: insurance of the construction contractor’s decennial liability (assurance de la responsabilité décennale du constructeur) and insurance of damage to the construction works (assurance des dommages à l’ouvrage). The scope of the compulsory coverage is specifically described in standard clauses that have been fixed through Ministerial Order (Arrêté). Article L. 243-8 of the French Insurance Code clearly states that any insurance policy acquired to fulfil compulsory construction insurance is expected to provide guarantees that are at least equal to coverage under the standard clauses. Any wording in a policy that does not comply with the standard clauses and is less favorable to the insured, is presumed to be invalid by the courts.

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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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David Lewin, Managing Director
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Guy Carpenter & Company, LLC has published its update on legislative and legal developments affecting insurers and reinsurers in Continental Europe. The report highlights key trends, laws and reforms that have been introduced or are expected in the region. Developed with the insurance practice of law firm Heuking Kühn Lüer Wojtek, the report addresses the continued changes and developments in the legal framework at the macro and micro levels. At the macro level governments across Europe are increasingly looking to reduce states’ cost burdens for healthcare. This has resulted in harsher judgments on cases involving accidents at work. At the micro level the reports points out the importance of the legal changes that are influencing statutory legal liability.

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George Carrington, Head of International Casualty Specialty Practice
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Inflation is always a major risk factor for the casualty industry. For the past seven years, monetary inflation has been low across most of Europe, and this has helped keep interest rates low. For casualty insurers, this can lead to a challenge, because the key cost-drivers of long-tail liability claims — salaries and wages, pensions and most notably medical care costs — have been growing much faster than monetary inflation.

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David Lewin, Managing Director
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Indications of an economic recovery and fairly flat renewal are already beginning to obscure the experience of the past year. For professional liability insurers, this is particularly disconcerting, for even as balance sheets grow stronger, the implications of the largest casualty catastrophe in more than 70 years are still unfolding. The lawsuits and claims may take years to resolve, suggesting that the effects of September 2008 will be with us for quite a while. As the situation develops, professional liability insurers should use what they learn to revisit accumulations in their portfolios and take action to protect their capital — and shareholder value — from future worldwide chain reactions of liability exposure.

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Carl Bach, Managing Director and John Barrows, Vice President
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Operating Platform

Carriers are still flexible with regard to the services that PAs/MGAs provide, including system use and claim handling. Ninety-five percent of respondents expect the PA/MGA to underwrite, rate, quote and bind the business, as well as issue and service policies, up from 80 percent in 2008. Loss control and premium audit services remain important to some carriers, securing 40 percent and 42 percent, respectively — roughly unchanged year-over-year.

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Carl Bach, Managing Director and John Barrows, Vice President
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The Program Administrators and Managing General Agents (PA/MGA) market has remained remarkably consistent from 2008 to 2009, despite the outbreak of the worst financial crisis in more than 70 years. While the number of respondents perceiving market growth has declined since last year, the outlook remains quite upbeat, especially given the year’s tumultuous market conditions.

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David Lewin, Managing Director
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For a claimant to successfully file a claim under Norwegian law, three cumulative criteria must be fulfilled:

• Basis of liability
• Causation
• Economic loss

Overview

Basis of Liability

For liability to be established under Norwegian law, it must be shown that the injuring party acted negligently (culpa). Either an act or the omission of performing an act may form the basis for liability, and whether either can be regarded as negligent must be evaluated based upon the prevailing facts. The injuring party will be liable if the actions or lack of actions by the injuring party are of a lower standard than objectively is to be expected by the bonus pater familias under similar conditions.

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