For risk managers, 2012 can't come soon enough. Next year is going to be the best year of their lives. Prices will continue softening in many lines, and that will place buyers and their brokers in a better bargaining position to negotiate lower rates and more favorable terms. In short, could 2012 be the year that proves that industry pricing moves in one direction only -- downward?
New catastrophe models, spearheaded by the release earlier this year of RMS 11.0, are going to take into account all the new risks in heaven and on Earth. Underwriters will thus price the risk more accurately than they ever have before.
Of course, the risk models won't even be necessary next year as no hurricanes will make U.S. landfall in 2012, not one. (There, I've pre-empted all the modelers and university experts for the 2012 hurricane season, and I've not even asked for a consulting fee.)
Next year, the U.S. Supreme Court will rule on the Obama administration's health care reform, issuing guidance on legislation that has confused nearly everyone in (and out of) the insurance arena.
Next year -- no joke -- will mark the end of all claimant fraud. So fast and accurate have the algorithms developed by the tech geeks become that fraudulent claims will be flagged before actuaries can save the files to their hard drives.
States will agree on measures on how to share surplus lines taxes under the Non Admitted Reinsurance Reform Act, which went into effect in July. Two competing interstate agreements, the Surplus Lines Insurance Multistate Compact backed by the brokers, carriers and the National Conference of Insurance Legislators; and the Non Admitted Insurance Multistate Agreement, backed by states and the National Association of Insurance Commissioners, are going to meld into one.
No outlandish coming-year predictions would be complete without weighing in on Solvency II, the capital rules to make sure insurers have enough money in reserve to pay claims in proportion to the risks they write. With Lloyd's estimating earlier this year that it was on course to spend $400 million on Solvency II implementation, I personally guarantee that Solvency II will be pushed back from its 2013 implementation date.
Oh, yes, and by this time next year, AIG will have paid off every penny of its obligations to the U.S. taxpayers.
The Republicans will remain in control of the House, and the Democrats in control of the Senate and the White House. All hail to the political status quo, which means risk managers will get next year what they got this year.
CYRIL TUOHY is managing editor of Risk & Insurance®. He can be reached at firstname.lastname@example.org.
December 1, 2011
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