On a personal note...

It is with immense pleasure I share the news of my exam qualifiying! Long-awaited dream comes true. Just waiting to complete three years of work based skills when I will be fully qualified - FIA.

After a temporary break due to my exams, I am now back to blogging again with the latest in the industry.

2010 Nat Cats, Disasters Cost $218 Bn – $43 Bn Insured; Says Swiss Re

According to Swiss Re’s latest sigma study, worldwide economic losses from natural catastrophes and man-made disasters were $218 billion in 2010, more than triple the 2009 figure of $68 billion. The losses cost the global insurance industry more than $43 billion, an increase of more than 60 percent over 2009. The events caused the deaths of approximately 304,000, the highest number of casualties since 1976. Swiss Re’s study pointed out that the severe catastrophes in 2010 “claimed significantly more lives than the previous year” when 15,000 people died due to catastrophic events. The Haiti earthquake was the deadliest, claiming more than 222,000 lives. Nearly 56,000 people died during the summer heat wave in Russia, while the summer floods in China and Pakistan resulted in over 6,200 deaths. Swiss Re’s study calculated that natural catastrophes “cost the global insurance industry roughly $40 billion in 2010, while man-made disasters triggered additional claims of more than $3 billion.” This compares with overall insured losses of $27 billion in 2009. Lucia Bevere, one of the study’s authors, added: “Insured losses were highest in North America in 2010, where they exceeded $15 billion. Despite very low hurricane losses due to the absence of hurricanes making direct landfall in the US, a series of lesser storms throughout the year resulted in this high figure.” Recent events have shown how destructive earthquakes can be. In 2010 they were the cause of “almost one third of all catastrophe losses.” The February 2010 earthquake in Chile and the September earthquake in New Zealand were the two costliest events in 2010, and led to insured losses estimated at $8 billion and $4.4 billion respectively. The study also concluded that overall natural catastrophe claims in 2010 were “in line with the 10-year average due to unusually modest US hurricane losses and in spite of notably high earthquake losses.” 2011 also promises to be an “above average” year as far as earthquake related losses are concerned. Swiss Re pointed out that the “total insured claims for the February 22 earthquake in Christchurch, New Zealand, are estimated to be between $6 billion and $12 billion. The massive Tohoku earthquake that struck Sendai, Japan on March 11 is also expected to trigger significant insured losses.” [IJ Ed. Note – these have been estimated to be as high as $30 billion]. Balz Grollimund, one of the study’s authors, explained: “Although no long term trend of increasing global earthquake activity has emerged, the number of fatalities and insured losses from earthquakes are on the rise. The main reasons are population growth, the higher number of people living in urban areas as well as rising wealth and rapidly increasing exposures. Many of these rapidly growing urban areas are located in seismically active areas.” Ten events each triggered insured losses of at least $1 billion in 2010. In addition to the earthquakes winter storm Xynthia in Western Europe caused insured losses of $2.8 billion. Three storms in the US and two storms in Australia also generated losses of over $1 billion. Property claims from the BP Deepwater Horizon explosion in the Gulf of Mexico are estimated at $1 billion. However Swiss Re pointed out that “given the complexity of the claims, the latter figure is still subject to substantial uncertainty. The overall insurance loss is higher, as liability losses are not included in the sigma numbers.” While the $43 billion paid by the insurance industry is a substantial figure, it’s less than 20 percent of the total worldwide economic losses from natural and man-made catastrophes in 2010. “Asia was the hardest-hit region with total damages of approximately $75 billion,” said the study. “Pakistan and several large regions in China experienced extraordinary rainfall during the summer, resulting in devastating floods.” Thomas Hess, Chief Economist of Swiss Re, commented “2010 was not only characterized by severe earthquakes that ranked among the deadliest, costliest and most powerful in history, but also by a series of extreme weather events, such as major floods. Some of these flood events sadly affected countries with poor emergency preparedness and underdeveloped insurance markets. “These events show the urgent need to strongly improve prevention and post disaster management in order to reduce human suffering,” he continued. “The rapidly increasing wealth in emerging markets should also be used to address these problems. This wealth will also allow insurance to grow and close part of the large insurance protection gap in many emerging markets, the main reason why the financial protection against catastrophes is low in most emerging markets. Source: Swiss Re

Facts and Figures

Insurance employs 275,000 people in the UK and manages investments amounting to 24pc of the country's net worth, with the ABI's members controlling a combined £1.6 trillion in assets and owning 13pc of the UK stock market.

"The long-term nature of our liabilities and the assets we need to invest in to back those liabilities makes us a really important part of the funding of the future of the UK," said Mr Otto Thoresen, the new incoming Chief Executive of Association of British Insurers.

Nippon Life to take a 26% stake in Reliance Life Insurance

http://www.ft.com/cms/s/0/6b367df0-4e5b-11e0-98eb-00144feab49a.html#axzz1GbzDxyoF

Japan Earthquake

A 8.9 magnitude earthquake - worst in the history - has hit Japan with an epicenter near the north-eastern city of Sendai, claiming an estimated 1,000 lives and causing tsunami waves devastating much of its Pacific seaboard, fires and destruction on its way.

There are dangers of a nuclear reactor meltdown following an explosion at the Daiichi nuclear plant in Fukushima. People living within a 20km radius have been evacuated following the explosion and radiation levels growing 1,000 times higher than in normal times. Government is planning to distribute iodine - an 'anti-radiation' chemical, which can block the absorption of radiation by body parts, to people in surrounding regions!

For more details follow:

http://www.ft.com/indepth/japan-earthquake

Landmark Asbestos ruling

In a landmark ruling, the supreme court has upheld a £240,000 compensation claim by Dianne Willmore, in the first case of a former pupil suing local council for negligent exposure to the risk of deadly asbestos dust.

For more, read on:

http://www.guardian.co.uk/education/2011/mar/09/asbestos-school-compensation-dianne-willmore

EU Gender Directive

The next post is going to be on the latest EU court ruling on not using gender as on eof the rating factors in calculations of premiums and benefits. Some interesting reads:

http://www.ft.com/cms/s/0/81384176-43e6-11e0-8f20-00144feab49a.html#axzz1FOX5j8mo

http://www.postonline.co.uk/post/news/2029590/cea-opposes-gender-ruling?wt.mc_ev=click&wt.mc_id=E363|E18859&wt.seg_1=email||newsletters||POST%20-%20Insurance||Daily||1%20March||CEA%20opposes%20gender%20ruling

http://www.postonline.co.uk/post/news/2029717/insurers-equally-divisive-pricing-factors-gender-ban?wt.mc_ev=click&wt.mc_id=E363|E18859&wt.seg_1=email||newsletters||POST%20-%20Insurance||Daily||1%20March||Insurers%20could%20turn%20to%20equally%20divisive%20pricing%20factors%20after%20gender%20ban

http://www.insurancedaily.co.uk/2011/02/28/gender-directive-could-require-uk-insurers-to-raise-almost-1bn/

http://www.genre.com/sharedfile/pdf/RiskMatters200806-en.pdf

General Insurance update February - 2011

Disclaimer: All content of this post is from the Institute of Actuaries website.

1. Reinsurance Cost to fall 1/1
Reinsurance premiums are expected to fall by as much as 5% to 10% after another benign loss year. Deepwater horizon might have been the worst environmental disaster to date - with clean up costs of up to $40bn and combined fines of about $21bn put on BP, Transocean and Haliburton - but BP chose to self-insure and the insurance industry did not have to bear the brunt of it. There were 19 named storms in US, none of which made a landfall in US. Besides there were three major earthquakes in the year (Haiti, Chile and New Zealand) with total expected insured losses worth $17bn.

Deepwater Horizon oil spill has led to US Government planning to raise the loss cap (currently at $75million for consequential and economic damage, and $1.5bn for spill clean-up costs) to $10bn for the former category. A new reinsurance consortium as launched before Christmas which will provide unprecedented levels of liability coverage also expected to be around $10bn. The consortium will be managed by AonBenfield and involves a number of reinsurers led by Munich Re.
For related information, read on:
http://gwujeel.wordpress.com/2011/02/15/game-changer-can-a-40-billion-spill-transform-an-industry/

2. Divorce Insurance
A cover to meet costs associated with divorce has been launched in US! WedLock Divorce Insurance is sold in units, with each unit costing $15.99 per month in exchange for providing $1,250 of coverage. Policyholders can buy anywhere from one to 200 units. Every year that the policyholder continues to renew beyond the 48-month waiting period, the policy increases in value by $250 per unit. It hasn't been a huge commercial success yet, though!

more to follow....

Insurance Premium Index

This article from the AA brings out in concrete numbers what we all have been hearing about motor premiums in the UK - a sharp rise of nearly 40% in the Shoparound cost of an annual comprehensive car insurance policy, and of about 55% for a TPFT cover - the biggest annual jump recorded in this index maintained by AA.

There has been an increasing trend in the Home Insurance Shoparound price (nowhere nearly as high as that seen in Motor). The market average for home insurance has more or less stayed at the same level. According to analysts, home insurance is still value for money - in contrast with motor premiums which have been adversely affected by the proliferation of claim lawyers and fraudulent claims.

For more details read on:

http://www.theaa.com/services/insuranceandfinance/insuranceindex/

Welcome!

Welcome to my latest initiative to keep myself abreast of what is happeneing in the insurance world as I prepare for my SA3 exam. I needed a place to keep the records of what I have been learning, and so came up with this idea!

I have doubts about being able to find time to update this column regularly, but I am hopeful to make some use of it and help others use it as well.

Keep coming back!