Posts Tagged ‘risk management’



December 4th, 2014

Casualty Catastrophe Risk Modeling: Part II

Posted at 1:00 AM ET

Casualty catastrophe occurrences have become increasingly common over the past decade. The recent 2008 financial catastrophe is the easiest to cite, due to its sheer size and the fact that it continues to unfold even today. But, there have been many others. The collapse of the “dotcom economy” led to scandals around initial public offering laddering and equity analyst conflicts of interest. Accounting firms were not alone in suffering financial loss related to such debacles as Enron, WorldCom, Tyco and Adelphia. While insured losses did not reach those of property catastrophes, economic damages were profound. Enron’s loss of USD66 billion in market capitalization alone - not including the economic damage caused to other companies - was more than double that of Hurricane Ike (approximately USD30 billion). The financial catastrophe is estimated to have caused economic damage of above USD1 trillion, with more likely to follow. When considered in the context of the Deepwater Horizon industrial accident, the casualty catastrophe that unraveled from the largest US offshore energy event over the past 40 years was by no means remote. Beyond the initial property loss of the actual drilling rig, liability risk in paying claims continues to extend and ripple throughout the supply chain involved as well as the environmental impact to numerous coastal and commercial businesses. Asbestos litigation, perhaps the longest casualty catastrophe on record, has paid out over USD70 billion and by some accounts may be entering its third wave. Therefore, asbestos is an emerging crystalizing risk that needs to be continuously monitored, measured and modeled for those who continue to be exposed to it.

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November 24th, 2014

Modeling Terrorism

Posted at 1:00 AM ET

Modeling methodologies for terrorism have been continually refined and updated since the three major modeling companies - AIR Worldwide (AIR), EQECAT and Risk Management Solutions (RMS) - released their first terrorism models in 2002. Quantifying the economic, insured and human losses from a terrorist attack continues to pose major challenges for (re)insurers and alternative capacity providers. There are three main techniques to model terrorism risk:

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November 18th, 2014

Emerging Risk: Periodic Payment Orders

Posted at 1:00 AM ET

For a number of reasons the United Kingdom represents an extreme example of the impact of annuity compensation structures. For severe bodily injury cases it is now highly likely that the claimant will opt for an annuity structure (known as a periodic payment order, or PPO) rather than a lump-sum. These are often indexed accordingly to the Annual Survey of Hours and Earnings (ASHE) (1). As a consequence, the uncertainties that had previously been transferred to the claimant are now retained by the insurer (and to a certain extent, its reinsurers). Unlike an individual claimant, the insurer needs to articulate these risks in its capital modeling. These risks can be categorized as follows:

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November 12th, 2014

Cyber Coverage: Directors & Officers (D&O) Liability

Posted at 1:00 AM ET

Cyber coverage is also having an effect on directors and officers (D&O) liability in the United States. Oversight and increased requirements for disclosure on cybersecurity are making D&O coverage more important than ever. With the rise of data breaches and other cyber-attacks, directors and officers are responsible for making sure that they are taking sufficient steps to protect their company’s digital assets. In the case of a data breach, directors can be hit with shareholder suits and shareholder derivative actions claiming that the directors breached their fiduciary duty to the company for failing to put adequate cyber security measures in place.

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October 30th, 2014

Affordable Care Act: Health Insurers Addressing the Need to Develop New Strategies

Posted at 1:00 AM ET

barker-smallPhillip Barker, Senior Vice President

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It has been a little over four years since the enactment and subsequent implementation of the Patient Protection and Affordable Care Act, more widely known as the ACA. The impact on the insurance industry as a whole has been tremendous, but it has not been shared equally among the industry subsectors. While the property/casualty (P&C) industry was not exactly spared, receiving a comparatively “light touch,” the ACA has been a catalyst helping create a transformational bridge between the P&C and the health insurance industries.

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October 29th, 2014

Managing Reserve Risk

Posted at 1:00 AM ET

michelle-harnick-smallMichelle Harnick, Managing Director

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Given that the leading cause of financial impairment of insurance companies is inadequate reserves and our view that a reserve “cycle” not only exists but may soon enter a period of adverse development, Guy Carpenter has spent considerable resources researching and building models to better understand and manage reserve risk.

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October 29th, 2014

New Solutions Help Mutual Insurers Face Market Challenges

Posted at 1:00 AM ET

woods_jay-125haldeman_john_bioJay Woods and John S. Haldeman II, Co-chairmen of Guy Carpenter’s Mutual Company Specialty Practice

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Mutual insurance companies of all sizes currently face challenging market conditions where success requires not only focused distribution and operational excellence, but also access to increasingly sophisticated analytics services and products. How these firms use their resources and advanced technology to respond to these issues will separate market outperformers from underperformers.

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October 27th, 2014

Guy Carpenter Launches New Healthcare & Life Specialty Practice

Posted at 7:30 AM ET

Guy Carpenter today announced the launch of its new US Healthcare & Life Specialty Practice which will focus exclusively on the unique needs of health providers and insurers in this evolving segment. The practice will consist of a team of more than 50 health, healthcare and life broking professionals and actuaries dedicated to helping clients develop and implement strategies to best underwrite and manage the unique risks of this expanding and specialized market.

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October 27th, 2014

The Insurance Risk Benchmarks Research: Insights for the Industry and the E&S Market

Posted at 1:00 AM ET

woolstenhulme_micah_photo-smallMicah Woolstenhulme, Manager, ERM Services, Strategic Advisory

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The Insurance Risk Benchmarks Research is an ongoing project sponsored by Guy Carpenter & Company and Oliver Wyman to assist property/casualty (P&C) companies with profiling enterprise risk. Articulating an individual company’s risk profile requires assessment of both absolute and relative financial uncertainties. The absolute uncertainties can ultimately be codified in an economic capital model, but robust review of relative historical performance invariably improves the codification of certain systemic risks.

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October 19th, 2014

Baden-Baden Reinsurance Symposium Assesses Future Impact of Current Market Conditions

Posted at 11:30 PM ET

Guy Carpenter hosted “The Reinsurance Industry of the Future,” the Reinsurance Symposium held in Baden-Baden, Germany on October 19. A distinguished line-up of industry luminaries expressed their views on whether the current changes impacting the reinsurance sector are permanent and structural in nature, are a tactical response to short-term conditions, or are part of the normal evolutionary process.

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