Category Archives: Reinsurance

Для тех, кто интересуется безопасным доступом к онлайн-играм, наш партнер предлагает зеркало Вавады, которое позволяет обходить любые блокировки и сохранять доступ ко всем функциям казино.

Groundbreaking Flood Models for Latin America

Posted on by

Willis Re has introduced long-awaited flood models for Latin America through their research arm Willis Research Network (WRN). The models focused on large event scenarios for key cities such as Sao Paulo, Santiago and Bogota.

“The flood models provide South American insurance and reinsurance firms, as well as local governmental organizations, with new information that helps to identify and manage their exposure to flash floods caused by heavy rains and riverine overflow. Related results will be available for individual companies as well as the market as a whole and will have implications on planning, reinsurance and risk mitigation.”

The news was presented during the Geneva Association‘s 2nd Climate Change and Insurance meeting held in Sao Paulo last month by Dr. Juan Enlgand of Willis Re, who stated that these models might be used to consider the potential impact of climate change.

These models are greatly needed to say the least. Last year, floods and mudslides in Brazil caused 44 deaths and an estimated $1 billion in damages. In April, more than 250 died in Rio de Janeiro after torrential rains caused massive flooding and landslides. In June, more flooding in Brazil killed at least 41 and left more than 120,000 homeless. As Margo Black, CEO of Willis Re Brazil commented:

“Urban flood risk is an acute concern for Latin American re/insurers who have been challenged by growing losses and the lack of models to guide risk management.”

With Willis Re’s new models, it is hoped that future losses from almost-certain floods will be lessened in the ever-growing, major cities of South America.

The “Unintended Consequences” of the Neal Bill

Posted on by

In the video below, Swiss Re has done a marvelous job using new media to help advocate its position against “The Neal Bill” (HR 3424) that is aiming to impose a new tax on foreign reinsurers — something most of the stakeholders in the insurance industry are against.

The Risk and Insurance Management Society (RIMS), a nonprofit organization that represents risk managers (and publishes this blog … and pays my salary), is also firmly opposed due to the fact that any tax on the reinsurance industry will only be passed on first to the insurance industry and then to insurance buyers. Taxing reinsurers will also threaten capacity and make coverage harder to find at any price.

National Underwriter wrote a good, informative piece explaining such:

Speaking for RIMS, Scott Clark, risk and benefits officer for the Miami-Dade County School Board and a RIMS board liaison, said, “The group has always opposed proposals to restrict market access to insurance capacity.”

Mr. Scott called the legislation “a great threat to insurance capacity in the United States.”

“Over the past decade it has been proposed several times, not surprisingly, by a handful of U.S. insurers which seek to gain via a protected market that would allow them to charge higher prices,” Mr. Clark said.

Honestly, the changes proposed by this bill represent yet another example of how poorly Washington understands insurance. Advocates of the bill probably think they’re helping out insurance buyers by giving U.S. insurers an advantage. They’re not. No one — not reinsures, not insurers, not brokers, not commercial buyers, not personal line buyers — will benefit here.

And Swiss Re sums that all up perfectly in 140 seconds. (For more on the issue, you can check out www.KeepInsuranceCompetitive.com)

Insurance and Latin America

Posted on by

This morning at RIMS 2010 Boston, I got the chance to speak with Swiss Re’s Ivan Gonzalez, who heads the company’s Latin America and Caribbean Single Risk business. In our talk about the increasing opportunities for insurers in the region, the focus quickly, and predictably, turned to Brazil, which presents great promise to the re/insurance industry for two main reasons.

First, Brazil is among the fastest-growing major economies in the world. With nearly twice the population of Mexico and a much larger economy, this prominent “BRIC” nation (the name du jour for the four most most-promising emerging markets: B = Brazil, R = Russia, I = India, C = China), is one of the “next big things” for many business sectors, and as the GDP continues to rise along with the per capita income, more and more companies and individuals will be purchasing insurance.

Second, Brazil liberalized its once-monopolized reinsurance market in 2008, and many companies have been eager to steal market share away from the state-run reinsurer.

Here’s what I wrote about the change not long after it happened.

With this sweeping change, the region’s largest insurance market is now poised for a commercial lines takeoff as outside players begin writing business previously reserved solely for the state-run Reinsurance Institute of Brazil (IRB), which was formed in 1939.

“We had the monopoly of the IRB for 70 years,” says Marcelo Homburger, vice-president of Aon Risk Services Brazil. “Companies could compete in the direct market, but then they had to go to IRB for their coverage.”

Companies including Swiss Re and XL Re rushed into the open market, bringing a capacity influx for eager primary insurers, who have historically struggled to gain coverage beyond the boilerplate terms, conditions and capacity offered by IRB. “[IRB was] determining all the prices and terms,” says Homburger. “It was not very creative and it was not very competitive. We will be able to provide products that we never could before.”

According to Gonzalez, however, the business hasn’t exactly exploded.

“A lot has happened — but very little happened,” said Gonzalez. “People thought the IRB would, in the first two years, lose a lot of business.”

And while those people overestimated the speed of change in what Gonzalez characterized as a “not fully liberalized” marketplace, he does still think it is coming — slowly but steadily. “I think commercial insurance is going to grow significantly,” he said. “We’re bullish on Brazil. We’ve been bullish on Brazil for 60 years … The magnitude of projects [now occurring] is creating a shift.”

Gonzalez also noted that next year will mark the 100th year that Swiss Re has done business in Latin America. Plan to hear a lot more about that going forward.

brazil_map

Reinsurance Rates on the Decline . . . Still

Posted on by

We heard it in January — reinsurance rates across most lines of the property/casualty business around the world was declining, and according to Guy Carpenter & Company, that decline is continuing.

In the report, “April 1 Reinsurance Renewals: Rates Lower; Returns Under Pressure,” the risk and reinsurance company covers regional developments as well as key issues and trends, which includes:

JAPAN
•    Rates at the April 1 renewal showed a declining trend in most classes.  Specific changes varied by line of business, and there were occasional exceptions on problematic lines, such as marine hull proportional treaties.
•    Total capacity sought by buyers for their major catastrophe exposures was similar to the expiring year, with reductions by some cedents and increases by others.
•    The effect of the Chilean earthquake was limited, though it is possible that timing may have played a part, as many of the major placements were quoted, priced and, in some cases, completed before the effects of this loss could be fully realized.
•    Overall, the renewal in Japan was smooth and perhaps easier for buyers than in many previous years, reflecting a generally softer market.  With few major issues or changes to terms and conditions, renewals were completed within similar timetables as compared to prior years.
US PROPERTY CATASTROPHE
•    Pricing for U.S. property catastrophe reinsurance at April 1 saw the continuation of the decreasing pricing trend in evidence at January 1.  Capacity continued to be plentiful – a critical element in companies’ ability to secure favorable terms and conditions.  Individual renewals vary significantly, based on each company’s own experience and positioning.
•    U.S. catastrophe pricing for nationwide companies decreased 8 percent when not factoring in the impact of the catastrophe model changes, and by 13 percent on average when adjusted for these changes.
LATIN AMERICA
•    Although not a significant source of April 1 renewals, the Latin American region provides an early indication of the implications of the Chilean earthquake for pricing and terms and conditions.  Preliminary estimates of the aggregate loss arising from the earthquake vary widely. The market may continue to evolve going into the July 1 renewals.  Overall terms and conditions in the region as a whole appear to be only modestly affected and, in some cases, unchanged by the earthquake. However, pricing varies by country.
REPUBLIC OF KOREA
•    In the property catastrophe segment, price changes ranged from decreases of 7.5 percent to increases of 2.5 percent, reflecting the variety of changes and experiences that included increased aggregates, deductibles and, in some cases, limits.
•    Korea’s property risk segment was affected by the Samsung loss of late March 2009, which occurred too late to be reflected in the April 1, 2009 renewal.  There was a second large loss in November 2009. Both losses were factored into the April 1, 2010 renewal, and loss affected treaties sustained increases of 10 to 15 percent. For loss-free treaties, rates were down by 5 to 10 percent.
•    Pricing was down by 10 to 20 percent in the liability market.  Loss experience has been light, making the business more attractive to underwriters.

JAPAN

  • Rates at the April 1 renewal showed a declining trend in most classes.  Specific changes varied by line of business, and there were occasional exceptions on problematic lines, such as marine hull proportional treaties.
  • Total capacity sought by buyers for their major catastrophe exposures was similar to the expiring year, with reductions by some cedents and increases by others.
  • The effect of the Chilean earthquake was limited, though it is possible that timing may have played a part, as many of the major placements were quoted, priced and, in some cases, completed before the effects of this loss could be fully realized.

US PROPERTY CATASTROPHE

  • Pricing for U.S. property catastrophe reinsurance at April 1 saw the continuation of the decreasing pricing trend in evidence at January 1.  Capacity continued to be plentiful – a critical element in companies’ ability to secure favorable terms and conditions.  Individual renewals vary significantly, based on each company’s own experience and positioning.
  • U.S. catastrophe pricing for nationwide companies decreased 8 percent when not factoring in the impact of the catastrophe model changes, and by 13 percent on average when adjusted for these changes.

LATIN AMERICA

  • Although not a significant source of April 1 renewals, the Latin American region provides an early indication of the implications of the Chilean earthquake for pricing and terms and conditions.  Preliminary estimates of the aggregate loss arising from the earthquake vary widely. The market may continue to evolve going into the July 1 renewals.  Overall terms and conditions in the region as a whole appear to be only modestly affected and, in some cases, unchanged by the earthquake. However, pricing varies by country.

REPUBLIC OF KOREA

  • In the property catastrophe segment, price changes ranged from decreases of 7.5 percent to increases of 2.5 percent, reflecting the variety of changes and experiences that included increased aggregates, deductibles and, in some cases, limits.
  • Korea’s property risk segment was affected by the Samsung loss of late March 2009, which occurred too late to be reflected in the April 1, 2009 renewal.  There was a second large loss in November 2009. Both losses were factored into the April 1, 2010 renewal, and loss affected treaties sustained increases of 10 to 15 percent. For loss-free treaties, rates were down by 5 to 10 percent.
  • Pricing was down by 10 to 20 percent in the liability market.  Loss experience has been light, making the business more attractive to underwriters.

As Chris Klein, global head of business intelligence at Guy Carpenter said, “There are several significant renewals at April 1 in the U.S. that did not show signs of impact from the recent global loss activity. There was some evidence of price tightening in parts of Latin America. The Chile situation remains uncertain, and earthquake losses generally develop more slowly than wind events.  Up to half of catastrophe loss ratio budgets were consumed, causing reduced headroom for a larger catastrophe later in the year.  This scenario, along with buoyant balance sheets, lower investment yields and thinner reserve releases, will put pressure on returns — sustaining active capital management and perhaps, in time, stabilizing the market.”

We will keep an eye on this potential stabilizing of reinsurance rates for the P/C market — stay tuned.