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Issue 87 - 4th Feb 2010
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Miller expands corporate risk offering with new unit and new staff
While the major reinsurers have been issuing their preliminary results the broking fraternity have been busy with a number of significant announcements. Specialist independent insurance and reinsurance broker Miller ha sled the way with the announcement of a major expansion of its corporate risk business led by new hire Ken MacDonald. Before joining Miller, he was Chief Executive Officer of Aon Global UK and previously led Aon’s captive and risk consulting business in Europe and Asia. The broker said Mr MacDonald would lead a new team – created from new and existing staff – “which will provide insurance programme design and placement services for major risk managed corporate accounts in UK and Europe”. The move has been described by Greg Collins, Miller’s Head of Professional Risks as a move to the next stage in the firm’s services to clients and would compliment and build on its reputation as a specialist broker.“Miller has been expanding in all its core areas of business and we felt the time was right to take our corporate client offering to the next stage of its development. Market consolidation has meant that many buyers are increasingly dissatisfied with commoditised offerings that lack individual attention and creativity. We believe that the Miller philosophy of independent advice, specialist expertise and the highest level of client service will be welcomed in this environment.” Mr Macdonald said the new team was entering the market at the right time. “I’m very pleased to be joining Miller, a firm with a tremendous reputation for service, independent advice, and technical excellence”, he added. “This is a very exciting time in the corporate insurance market as clients look for objective advice and innovative ways to deal with their complex risk needs. We are building a team of the highest quality insurance professionals, with a proven track-record in delivering innovative risk and insurance solutions to major corporate clients.”
Marsh tells National Oil companies there is opportunity for cost reductions
Broker Marsh has opened the lead up to its National Oil Companies Risk Conference this month saying it believes NOCs could be in a position to benefit from lower overall costs of risk over the next few years. “A decline in global demand for energy combined with fewer natural catastrophes and enhanced risk management techniques provide NOCs with opportunities to save substantial amounts on their insurance spend over the coming two years,” said Jim Pierce, Chairman of Marsh’s Global Energy Practice. “When energy demand begins to increase and NOCs re-examine previously shelved infrastructure projects, this could lead to substantial savings.” Based on a lack of natural catastrophes, plentiful insurance capacity and more sophisticated risk management techniques, NOC’s insurance costs could be up to 20% less for both the refining (downstream) and exploration & production (upstream) sides of their businesses. Companies involved in both onshore and offshore energy construction projects also stand to benefit from current market conditions. Marsh said in a statement: “Assuming there are no major catastrophes, Marsh expects to see a decline of between 10% and 20% by June this year for exploration & production insurance cover, with a further reduction of 15% by June 2011. For the refining, or downstream, side of the business, the reductions will be even more pronounced with reductions of up to 25% by June this year and a further 10% by June next year.” The company said it also expects insurance rates for both onshore and offshore construction projects to decline 5% by June, another 5% by January next year and a further 10% to 15% by June 2011. “While this news will be welcomed by all NOCs, companies that have established the highest levels of risk management will benefit the most,” Mr Pierce added. “Energy insurance underwriters increasingly want to see highly detailed risk management plans before they offer the best terms. Further, the NOCs that better manage total cost of risk, which is the combined cost of retentions and premiums for actual risk transfer, will be the ones that benefit most from the surfeit of underwriting capital available in the 2010-2011 energy insurance market.” The conference which will held in Dubai from February 22-24 will take a number of pressure issues for the NOCs including the challenges of resource scarcity, as well as how best to manage the strategic, operational and political risks to which NOCs are exposed. They will also hear how to get the most value from their spend on insurance.”
Underwriting does matter in the eyes of the rating agencies
In a lecture to the Insurance Institute of London Greg Carter Managing Director of the Insurance practice at ratings from Fitch addressed the issue as to whether underwriting really mattered in the eyes of the rating agencies. Interestingly despite years of underwriting losses over the past decade when the investment income had delivered the non-life industry’s profits he concluded that underwriting remains the bedrock of the industry and even more so since the collapse of the investment markets in the past two years ago. Indeed Mr Carter said: “The market has been faced with a number of issues when it comes to delivering profitable underwriting and they have addressed many of those issues.” He said the market’s record over the past decade has been poor and speaking on the day Munich re announced its profits for 2008 added that with that day’s exception the ability to drive underwriting profits was still no easy task. He said that his personal view was that the general cycles was now heading towards its bottom adding that the hope had to be that there would be an event which saw the rates rebound quickly
New Cat report to be delivered by Aon Benfield
Reinsurance broking group Aon Benfield, has launched of a monthly report that will deliver analysis on recent catastrophic events across the world. It will be published by the company’s Impact Forecasting team, which evaluates global perils for the re/insurance industry. The January 2010 study published this week highlights the devastation caused by the Haitian earthquake – one of the deadliest natural disasters in a century. The magnitude-7.0 event struck on January 12 and was followed by a massive global relief effort to assist the three million Haitians affected.
Steve Jakubowski, President of Impact Forecasting, said: “The impact of the Haitian earthquake is still being felt, and while insurance schemes have been activated to help repair the damage wrought, their contribution is relatively small compared to the total economic loss suffered in the region. The mobilisation of international relief efforts has been, and will continue to be, vital in assisting Haiti to get back on its feet.” To date, the earthquake is estimated to have claimed more than 200,000 lives, and while total economic losses amount to billions of US dollars, the insured loss figure is far smaller due to low insurance penetration in the region. Significant natural catastrophes also occurred elsewhere across the world in January. On January 9, California suffered a magnitude-6.5 earthquake off the northern coast, causing damage to 463 buildings with an estimated cost of £43 million. In the Mexican state of Baja California, severe flooding was witnessed between January 18-22, which left three people dead and more than 800 homes damaged. Meanwhile, heavy rains in South America killed more than 150 people and damaged tens of thousands of homes in Brazil, Peru and Bolivia. In Europe, a severe cold snap and extended winter weather affected several countries, claiming 276 lives – including 202 in Poland alone. In the UK, 29 people died during what was the longest cold period since 1981, and the economic loss was estimated at USD1.6 billion (GBP1 billion). Germany suffered nine deaths due to the cold weather, with an economic loss of around USD3 billion (EUR2 billion). In parts of Africa and the Middle East, flash flooding was prevalent in January. In Kenya, around 30,000 homes were destroyed and at least 35 people killed during two consecutive weeks of heavy rains. In Egypt, 15 people were killed and nearly 2,000 buildings damaged due to severe floods. During the month, Asia was also struck by a range of natural catastrophes, with earthquakes affecting Tajikistan and the Solomon Islands, destroying more than 2,000 homes, while cold weather impacted China, South Korea and India, resulting in nearly 50 deaths. Meanwhile, heavy rains impacted Pakistan, Indonesia, Israel, Jordan, and Australia – where more than 1,200 people were evacuated from their homes in New South Wales following a prolonged period of rain. In launching the new report Aon Benfield said; “The Monthly Cat Recap provides a valuable round-up of catastrophe data, including event magnitudes, economic and insured loss figures, and impact on local population and infrastructure
Jon Guy
Editor
Global Broker & Underwriter
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