By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®
At the beginning of 2010, word on the property insurance street was that one very large insurance carrier out there, and we will not name names, was looking to move some of its book of catastrophe-property insurance business. This insurer supposedly had too much aggregate exposure to quake and windstorm for somebody's tastes.
But here is where the story diverges a bit. Some of these CAT risks were good business, according to one source, so when word leaked out that the carrier was ready to unload them, it came as good news to the insurer's competitors.
The competition was waiting to see just what and when this large carrier would shed its CAT book. But now, several months later, it appears that the carrier has changed course and, instead of shedding business, it is now renewing it at lower rates.
Or maybe not. Another version of the story is that the carrier tried its best to get rid of this business. In its current state, the carrier cannot afford to be overexposed in the Gulf Coast and in California. But the carrier was having a hard time finding takers, this version of the story goes, and that if takers should appear, this carrier would still be glad to hand off the business to somebody else.
As one property underwriter put it, he would be "really nervous" if he were in this carrier's shoes headed into the third quarter.
According to Al Tobin, national property leader at Chicago-based insurance brokerage Aon, more than one insurance carrier decided at the end of 2009 that they were more exposed to U.S. CAT risks than they wanted to be. In response, those carriers are in the process of "stabilizing" their book, cutting back on capacity or at least keeping the capacity they have out there flat.
For buyers, it's all good. This is a positive development for buyers, said Tobin.
Just one of many that probably made for a happy property renewal for a lot of corporate risk managers with good risks and good loss histories.
August 1, 2010
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