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!