Insurers continued to post favorable results, with the medical malpractice class generating the highest return on equity for all commercial lines. The record industry profitability was fueled by historically low claims frequency, moderate claims severity and the release of loss reserve redundancies.
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.
Emil Metropoulos, Senior Vice President
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Some casualty risk accumulations stay hidden, but this doesn’t mean your exposure disappears. A single event could trigger a chain reaction of insured losses on professional and product liability covers, depleting your capital and possibly destroying shareholder value. In extreme cases, even solvency could be threatened. Using Guy Carpenter’s Casualty Cat model, developed jointly with Arium, Ltd., it’s possible to identify some of these “casualty catastrophe” risks early — before they drain your balance sheet.
Emil Metropoulos, Senior Vice President
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The global financial crisis that has unleashed havoc on credit and equity markets is the most recent casualty catastrophe (with both systemic and classic clash characteristics), and it may be the largest in recent memory … but it certainly isn’t the first. In fact, there have been many, and their frequency has increased over the past two decades, allowing financial markets little reprieve from one disaster to the next.
The stock market crash of Oct. 19, 1987, kicked off the modern casualty catastrophe age. The Dow Jones Industrial Average lost 22 percent of its value, earning the event the appellation “Black Monday.” Since then, we have endured the initial public offering (IPO) laddering and equity analyst scandals associated with the “dot-com bubble,” as well as accounting irregularities at Enron, Tyco, WorldCom, Adelphia and others. The loss of shareholders’ wealth with each of these events was profound, but none has been as severe as the one that currently has the world’s financial markets in its grasp.
David Lewin, Managing Director
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This latest issue of our legal update continues to expand our coverage of key legislative and judicial developments in Continental Europe. A variety of developments in insurance legislation are charted in this latest issue, from the introduction of mandatory self-insured deductibles in D&O liability insurance in Germany to the introduction of rights of direct access against liability insurers in Switzerland.
David Lewin, Managing Director
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The global economic situation has resulted in challenging conditions for the D&O liability insurance market. Particularly in the United States, carriers worry that a torrent of claims for damages is coming, which could run into the billions of dollars. Statistical models forecast compensation payments of approximately EUR3 to EUR10 billion.
A briefing published today by Guy Carpenter & Company, LLC looks ahead to the possible effects of inflation on long-tail reinsurance, as well as the impact of the credit crunch on reinsurers in the wake of the subprime mortgage crisis. The briefing, Casualty Specialty Update, examines the twin pressures that inflation and the global credit crunch are exerting on the global casualty reinsurance industry.
George Carrington, Managing Director and Head of European Casualty Specialty
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The July renewal does not affect a large number of cedents in Europe, but the programs that did renew suggest a continuation of the year’s broader themes. Hotspots across the market at the January renewal have persisted as expected, though the recent renewal was not robust enough to support forecasts for January 1, 2010.
Guy Carpenter & Company, LLC today published the latest installment in its series of updates on key legislative and legal developments impacting insurers and reinsurers in Continental Europe. The briefing, which can be downloaded below, addresses the implications of the ongoing global financial crisis, highlighting the types of legal liability and litigation that may be expected in Continental Europe.
According to the report, developed in conjunction with the insurance practice of law firm Heuking Kühn Lüer Wojtek, both the European and national parliaments are continuing to institute new laws to grant expanded powers of remedy to specific interest groups. These laws, ranging from extended accountability of ship-owners to the restoration of environmental habitats, have the potential to significantly impact casualty insurers’ fields of exposure and may call for the development of new and innovative insurance products.
Guy Carpenter & Company, LLC, the leading global risk and reinsurance specialist, today announced the successful completion of the previously announced acquisition of John B. Collins Associates, Inc. (Collins). The acquisition of Collins, the fifth largest reinsurance intermediary in the United States and seventh largest in the world, further strengthens Guy Carpenter’s capabilities in medical professional liability, agriculture, Florida property, program, and regional specialty lines of business.
Terms of the transaction have not been disclosed.
