Insurance industry risks crisis from natural disasters
The level of competitiveness of certain areas of the insurance market is unsustainable and could lead to failed firms. The warning comes from the Chief Executive of Jardine Lloyd Thompson and follows similar cautious notes from other major insurers. Dominic Burke says that premiums for some specialist corporate insurance have dropped to their lowest level in 10 years; natural disaster reinsurance for example is low due to a relatively low number of claims. However, the JLT chief warns that if a major natural disaster does strike, some underwriters could be caught out. The firm’s finance director has also sounded a cautious note over Florida, where prices have fallen sharply due to fewer incidents of hurricanes. Read the full story.
Total cost of risk higher again
For the third year in a row the average Total Cost of Risk (TCOR) has increased; this time by 2 per cent. The figures show the cost to businesses of insuring against key risks and the report is produced by the Risk Management Society. The increase in 2013 is modest compared to the 5 per cent seen in 2012 but the trend has prompted more companies to retain risk. The largest single increase with the TCOR figures is from property premiums, which rose 15 per cent. Jim Blinn, Executive Vice President at Advisen who co-produced the report commented. “With the growth of Enterprise Risk Management, understanding the breadth of exposures and their impacts becomes increasing important.”
Does cyber risk demand a federal strategy?
A debate last week focused on whether the cross-government model implemented to tackle terrorism should be applied to cyber risk; there was no definitive answer. Some at the Aspen Security Forum argued that a unified government approach was the right way forward, while others believe that the risk from cyber crime is different enough to that of terrorism that a ‘cut and paste’ of the terrorism policy would leave us vulnerable. One of the main differences that was highlighted was that cyber crimes involve the private sector to a greater level than terrorism generally does, suggesting that any national strategy would need to involve the business sector. Read the full story.
Demand for insurance increasing in China
As prosperity grows so does the demand for insurance and in China, where consumerism is rising the market is laden with opportunity. The country has a large number of millionaires; 2 million of them according to 2013 figures. These wealthy Chinese are buying property, luxury cars, designer fashion and technology – high ticket goods that call for insurance. The demand for insurance is not just from those with a 6 figure bank balance though; the middle class is growing fast in China. The opportunity for insurers comes with the growing demand and the current low penetration of insurance. With a greater number of people, owning more and in a part of the world at risk of natural disaster, the market is only going to continue growth. Read the full story.
