Risk & Insurance Online

CATASTROPHE RE PRICES ROARING UPWARD

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According to a report published by Guy Carpenter & Co. Inc., a global risk and reinsurance intermediary, global pricing in catastrophe reinsurance was affected by the high rates in the United States and Mexico. Rate increases averaged 76 percent in the United States and 129 percent in Mexico, in large part because of the losses suffered during the hurricanes of 2005. In comparison, the rest of the world averaged a 2 percent reinsurance rate increase.

REPORT: DISASTER PREPARATION LACKING

National governments across the globe need to better team with the insurance industry to prepare for so-called megacatastrophes, with the help of international agencies and other entities, announced the Organization for Economic Co-operation and Development's International Network on Financial Management of Large-Scale Catastrophes. The network was formed to facilitate this planning, and to study how to financially manage megacatastrophes of both natural and manmade origins, and how well-situated the global financial markets are to do so now.

BIG FIRMS BOUGHT TERROR INSURANCE IN '05

About 60 percent of large and midsize American companies purchased terrorism insurance in 2005, according to statistics from big-three broker Marsh Inc. In 2003, the rate was 27 percent. In 2004, it was 50 percent. The cost of terrorism property cover dropped 25 percent in 2005 compared with the previous year. Also factoring into a company's decision to buy the coverage, however, were its location, its industry and its total insured value, according to Marsh.

CARRIERS CLAIMING DISAPPOINTMENT

A new study suggests that disability carriers might not be satisfied with their claims management technology. Conducted by JHA, a subsidiary of General Re Life Corp., the study found that about 80 percent of respondents said their claims systems were difficult to maintain. The reasons cited include legacy systems that were overly engineered, and overly customized vendor systems. About 46 percent of the respondents said they were dissatisfied with their system, or experience lower productivity levels.

FITCH: UNDERWRITING IMPROVES IN P/C

About two-thirds of the 53 property/casualty insurers studied in a recent report from Fitch Ratings Service showed improved underwriting performance in the first half of 2006, compared with the same period in 2005. As for being in the black, 51 of the companies in the Fitch report posted profits for the first half of 2006. Last year, 48 had. In total, the 53 P/C carriers pulled in $124 billion in combined earned premium revenue in this period, which represented a 2.1 increase over 2005.

TWO OF SIX GREENBERG CHARGES DROPPED

New York Attorney General Eliot Spitzer has dropped two of six civil charges against Maurice "Hank" Greenberg, head of C.V. Starr & Co. Inc. and former CEO of American International Group Inc. The charges--accusations that AIG cooked its books to improve the appearance of underwriting income and minimize workers' compensation payments--became moot, the attorney general said, because AIG settled in its case with Spitzer. The remaining four claims also focus on deceptive accounting claims.

MARSH SACKS 750 PEOPLE IN COST-CUTTING MOVE

Marsh & McLennan Cos., announced its second major cost-cutting program in two years, resulting in the loss of about 750 jobs. It expects the program to result in about $350 million of annual savings by the end of 2008, including $220 million in the first 12 months. Marsh expects to incur about $225 million of charges for the program, with 15 percent incurred in 2006, 55 percent in 2007 and 30 percent in 2008.

--Compiled by staff from news and wire reports.

October 15, 2006

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