A line by line comparison of respondents’ appetites in the prior year’s survey with those of this year reveals some changes in emphasis. Workers compensation and medical malpractice experienced large growth in percent of respondents who were currently writing, looking for new growth or aggressively seeking growth. The property line grew by 6 percentage points to become only the second line, outside of general liability, where the majority of respondents say they are pursuing business. Inland marine, accident & health and professional liability for insurance agents showed significant declines in business pursuit. Overall, many of the lines saw drops in appetite or remained unchanged. It appears that current economic conditions and elevating loss ratios are keeping carriers’ growth expectations in commercial lines business relatively flat.
Posts Tagged ‘workers comp’
Guy Carpenter today released its July 1 Renewal Briefing that shows price declines have continued to moderate, predominantly on programs covering US wind. Overall pricing was down again at the July renewal across virtually all geographies and lines of business. However, additional limit placed over the past few months is partially responsible for the stabilization of price declines, particularly for US property. Increased demand for reinsurance and expansion of tailored coverage persisted through the July renewal period from previous seasons.
The Republican-led Financial Services Committee in the House of Representatives put forward a draft proposal outline to reauthorize the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) on May 1, 2014. After further negotiations, the House Republican leadership presented the TRIA Reform Act of 2014 on June 11 that proposes a five-year reauthorization of the federal program (to the end of 2019) with a similar copay structure to that of the Senate bill. The full senate passed their committee’s recommended version 93-4 on July 17, 2014. However, a number of changes have also been proposed that have the potential to impact the market if fully implemented, including higher program triggers for non-nuclear, biological, chemical and radiological (NBCR) events, an increase to the recoupment rate and an enhancement to the program’s taxpayer repayment requirements. The table below outlines the different terms and durations that have been put forward by the Senate and the House.
Even if the Terrorism Risk Insurance Program Reauthorization Act (TRIPRA) is renewed without wholesale changes, the recent organic growth in US nationwide workers compensation premiums as a result of rate rises and payroll growth is likely to cause insurance companies’ deductibles to increase. This in turn is likely to increase demand for terrorism reinsurance.
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.
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.