Severe weather hit the central United States over the last several days, spawning several tornadoes, large hail and damaging straight-line winds. The town of Moore, Oklahoma experienced the worst of the outbreak. A rare EF5 tornado, the most powerful ranking on the Enhanced Fujita Scale, obliterated scores of buildings and killed at least 24 people, 9 of them children. The tornado was reported to be 1.3 miles wide and spent 40 minutes on the ground, leaving a 17 mile trail of destruction. According to AIR Worldwide, the estimated value at risk from the EF5 is between USD2 billion and USD6 billion. Oklahoma’s Insurance Commissioner, John Doak, stated that insured losses could exceed the cost of the 2011 Joplin tornado, which was nearly USD3 billion.
Posts Tagged ‘US’
While reinsurance premiums remained broadly stable in the established markets of the United States, Canada and Western Europe between 2007 and 2011, strong growth has been recorded in emerging market regions, particularly China, India and other countries in South and East Asia.
Thirty-five percent of insured natural catastrophe losses between 2009 and 2011 were located in Asia while only 33 percent were in the United States. Australia and New Zealand also saw a marked increase in natural catastrophe insured losses during this period, with 19 percent of the total. This is in stark contrast to the long-term trend of more than three-quarters of all insured natural catastrophe losses occurring in the United States.
Here we review recent GC Capital Ideas posts that have focused on 2013 reinsurance pricing trends.
April 1 Renewals See Reinsurance Pricing Stabilize Amid Dynamic Capital Growth: Guy Carpenter reports that dynamic capital growth and ample reinsurance capacity resulted in a relatively stable renewal at April 1, 2013. In a briefing released today, Guy Carpenter comments that the convergence of traditional and alternative capital sources is changing the marketplace, with non-traditional capacity now making up an estimated 14 percent of global property catastrophe limit.
Japan Values Long-Term Continuity: As in every past year, Japanese (re)insurers look to the January 1, 2013, reinsurance renewal for guidance as to the likely state of the market for their renewals at April 1. This year they will have been encouraged with a market characterized by excess capital, overcapacity and easing prices for loss-free business. This scenario is evidenced by the Guy Carpenter Global Property Catastrophe Reinsurance Rate on Line index, which fell at renewal, albeit marginally. This environment will come as a welcome change to Japanese buyers, who have fought their way through the last two renewals against adverse market conditions caused by a series of significant losses in the Asia Pacific region.
Chart: Guy Carpenter Regional Rate on Line Index, January 2013: There was variation regionally in the Guy Carpenter Regional Property Catastrophe Reinsurance Rate on Line (ROL) index. U.S. property catastrophe pricing was most affected by the landfall of Superstorm Sandy while other regions were flat to down.
Chart: Guy Carpenter Global Rate on Line Index, January 2013: The Guy Carpenter Global Property Catastrophe Reinsurance Rate on Line (ROL) index fell marginally at the January 1, 2013, renewal. This is the seventh consecutive annual renewal in which changes to the index have equaled 10 percent or less, indicating a global market with capacity appropriate to meet demand.
January 1, 2013 Renewals Bring Stable Reinsurance Pricing: Guy Carpenter reports that the reinsurance sector enters 2013 equipped with ample dedicated capital and stable pricing. In its 2013 global renewal report, The Route to Profitable Growth, Guy Carpenter finds that the January 1, 2013 renewals took place against a stable backdrop, with only loss-affected lines and select regions experiencing price volatility. The market was supported by a combination of factors including lower than normal catastrophe losses during the first nine months of 2012, new reinsurance capacity and record-high levels of capital.
A fire at a fertilizer plant in West, Texas (about 80 miles southeast of Dallas) sparked a deadly explosion that killed an estimated five to 15 people and injured more than 160 on Wednesday April 17. According to reports, the explosion occurred at approximately 8:00 PM CDT (01:00 UTC). Prior to the blast, a fire was reported at the plant. A reported 50 to 75 homes were destroyed, as well as a 50-unit apartment complex. A nursing home and middle school were also reported to have severe damage. While officials have not determined a cause for the explosion, they do not believe that foul play was involved.
Two explosions in Boston, Massachusetts killed at least three people and injured more than 140 on Monday, April 15. Both explosions occurred in the Boston Back Bay area at about 2:50 PM EDT (18:50 UTC). The blasts occurred near the finishing line of the Boston Marathon, some four hours into the race. One blast occurred near a sports store and the other close to a viewing stand, near 673 Boylston Street at the intersection of Boylston and Exeter. Details around the explosions are still incomplete but the Federal Bureau of Investigation (FBI) has launched a “criminal investigation that is a potential terrorist investigation.”
Two explosions were reported in Boston yesterday. The explosions occurred in the Boston Back Bay area at about 2:45 PM EDT (18:45 UTC), on Monday April 15. The explosions occurred after winners had finished the Boston Marathon. One occurred near a sports store, and the other near a viewing stand near the finish line. Explosion locations were reported near 673 Boylston St, or near the intersection of Boylston and Exeter.
Over the last two years, several powerful earthquakes have caused widespread damage, leading to significant losses for (re)insurers. Four out of the five most costly earthquakes on record have occurred since the start of 2010, and all four of these events were located outside the United States.
Here we review past GC Capital Ideas stories that have focused on legislation surrounding insurance covering terrorist acts.