Disaster Losses Bring Bermuda Market's Importance to the Fore
--By Jonathan Kent
A major storm event in the United States this year is unlikely to have much of an effect on casualty lines.
Bermuda's importance as an insurance and reinsurance center has come to the fore at a time when insured losses from global catastrophes in the first half of the year have totalled $55 billion.
That is the view of Robert Hartwig, president of the New York-based Insurance Information Institute, who has been telling some Americans impacted by natural disasters of Bermuda's role in aiding their recovery.
Hartwig, in Bermuda in July to attend a dinner event for brokers hosted by insurer Canopius, said he had recently visited Tuscaloosa and Birmingham in Alabama, an area which suffered around $2 billion of tornado damage this spring.
"I sat down with the editorial boards of both newspapers in the area to talk to them about how the insurance process works," Hartwig said in an interview. "I told them that a lot of money to rebuild their homes would come from places like Bermuda, Switzerland and Germany. They were quite surprised to hear it.
Hartwig appeared in a webinar on global catastrophes put together by Munich Re and the institute. The event highlighted that economic losses of $260 billion so far this year have made 2011 the costliest year on record, even with the second half of the year still to come. The biggest event was the earthquake and tsunami in Japan, which cost $210 billion.
The previous costliest year was 2005, the year of Hurricane Katrina, which saw economic losses of $220 billion.
Half-year insured losses of $55 billion were four times the first-half ten-year average. And the $17.3 billion in insured losses in the US was well over double the ten-year average.
Hartwig said that while property and catastrophe re/insurance rates were increasing in the Asia Pacific area and, to a lesser extent, in some catastrophe-prone areas of the United States, the conditions still do not exist for a broader property and casualty market turn that many Bermuda companies are waiting for.
Though hurricanes were often talked about as being potentially "market-turning," it was unlikely that a major storm event in the United States this year would affect most casualty lines, such as medical malpractice, he added.
While insurers are operating in a tough market right now, Hartwig sees real opportunities ahead for the industry with the growth of population and global wealth.
"Looking into the future, each increment of growth you realize is going to require you to assume a greater increment of risk," Hartwig said. "The greatest growth opportunities exist, not in the United States or Western Europe, but in the emerging markets, where economic growth and growth in insurance premiums will be higher. However, these are riskier places to do businesses, in terms of catastrophes and political risk.
Editor's note: This article was first published on the www.royalgazette.com
September 1, 2011
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