The authoritative snapshot of the major events in the industry each week. If you would like to register for A Week In the Market just click here
Issue 96 - 9th April 2010
---------------------------------------------------------------------------------------------
Commission debate hots up with IUA backing Lloyd’s slip stance
International Underwriting Association Chief Executive Dave Matcham has told his membership that the association will back the move by Lloyd's to drive greater clarity on the use of contingent commissions. Mr Matcham issued a letter to the IUA’s membership to say that the association was fully in support of the move by Lloyd’s to require managing agents to disclose any contingent commission payments on the slip at the time of placement. Mr Matcham said: “At the end of last week, Tom Bolt, Lloyd’s Performance Director, issued a Lloyd’s Bulletin on the subject of broker remuneration and distribution costs. The bulletin identified a new requirement for Lloyd’s managing agents to report to the Lloyd’s Performance Directorate details of current contingent commission arrangements made with brokers. It specifically asks that such arrangements are shown clearly on the slip. IUA has always fully supported complete disclosure to the client of all forms of broker remuneration and would like to confirm to members that it endorses the objectives behind the requirements contained in the Lloyd’s bulletin. IUA fully supports the efforts of the Lloyd’s Performance Directorate to achieve full transparency of distribution costs.” The move comes two weeks before thousands of risk managers gather in Boston for the RIMS annual conference where the question of contingent commission payments will be at the top of the agenda. RIMS has campaigned vocally for an end to such payments and has expressed its dismay and agreements between the major brokers and a number of US insurance regulators over their future use.
Reinsurers deliver bumper year says Aon Benfield
With reports that the 1 January and 1 April renewals have seen softening in many areas the pressure in rates looks set to continue after Aon Benfield issued its annual review of the financial performance of 30 top reinsurers last year. The Aon Benfield Aggregate (ABA), reports that global reinsurance capital made a remarkable recovery during 2009, totalling $396bn at year end and nearing the record levels set in 2007. The fact that there were few major losses which found their way into the reinsurance sector for 2009 also resulted in the ABA group’s shareholders’ funds surpassing their pre-credit crisis level of 2007, reaching $210bn – a rise of 28% on full year 2008. Aon Benfield said; “The ABA group account for more than 50% of estimated global reinsurer capital and therefore provide a representative view of the global reinsurance market. With potential excess capital in 2010 and a softening price environment, reinsurers face the dilemma of whether to return capital to shareholders or to retain it in anticipation of the next major catastrophe. The remarkable recovery in shareholders’ funds during the year was due to relatively low catastrophe loss burden, complemented by higher investment returns as financial markets rebounded. The capital surplus triggered a resumption of share repurchases with $2.4 billion returned to shareholders, a trend which has continued into 2010.” The hike in shareholders’ funds is a reversal of the results of 2008 when the major reinsurers experienced a 19% reduction in capital, in a year characterised by large claims from catastrophes such as Hurricane Ike, and heavy investment losses due to the global financial market crisis. Everything remains driven by the bottom line and therefore the fact that pre-tax profit trebled from $9 billion to $27 billion will give brokers another figure with which to stress the need for rates to be cut.
Marsh index to give clients chance to measure carrier’s financial strength
Broker Marsh is to launch a new service which will enable clients to monitor the financial performance of their risk carriers. “Marsh Market Information (MMI) is a breakthrough service that enables clients worldwide to monitor the financial condition of their insurance companies 24/7,” said the broker. “MMI addresses a top concern of clients by giving them instant access to detailed, current financial information and analyses on more than 1,500 insurance companies from Marsh’s industry leading Market Information Group.” It said the rationale behind the move was the growing need for finance and risk executives in all parts of the world to strengthen their risk governance and manage their counterparty risk. “With lessons learned from the global financial crisis, businesses around the world are strengthening all aspects of their risk governance and require the ability to monitor the financial condition of the insurance companies that participate on their insurance programs,” said Sandy Vietor, President of Marsh’s Global Specialties. “MMI gives clients a state-of-the-art platform that provides up-to-date information and lets individual clients establish their own set of analytical priorities for examining their portfolio of insurers.” The broker said MMI “is the only service that combines ratings and outlooks from all three major ratings agencies—AM Best, S&P, and Moody’s—with insurer and group financial data, stock charts, credit default swap spreads, news feeds and Marsh’s exclusive financial analyses”. The system will be available via the broker’s internet portal and will only be access by Marsh clients.
Pop’s Beck’s new insurance coverage after knife accident
While footballing icon David Beckham is reported to be the possessor of the biggest personal accident insurance policy min sport at £10 million veteran rock guitarist Jeff Beck is said to have taken out a new policy on each of his fingers following a bizarre accident. Scottish media report that Mr Beck who was voted one of the top 100 guitarists of all time by Rolling Stone magazine has insured each of his fingers for £700,000 after accidentally chopping off part of an index finger. The 65-year-old was slicing carrots for supper at his Surrey home when he sheared off the first finger of his left hand just below the top joint. As blood gushed from the wound, he packed the finger with ice and made a dash to hospital where surgeons sewed it back on. He has now increased his insurance from £700,000 per hand to £700,000 per finger. The new policy is said to cover him for accidents on and off stage. It comes as he prepares to promote his first album in seven years, Emotion And Commotion, which is released on Monday. A source said: "Jeff is taking no chances. He was at home making a stew when he cut his finger clean off. He was stunned when he realised what happened but held it together and managed to get himself to hospital."
Claims on the agenda at LUC
Senior figures from the London market claims sector are to have their say on the issues surrounding he market’s efforts to drive process and service. Specialist systems provider Fineos is hosting a seminar on April 21 starting at 11am in the Acord Presentation Suite at the London Underwriting Centre in Mincing Lane where Acord’s Roy Laker and Lloyd’s Gary Bass are among the speakers addressing the topic of Delivering Improved Claims Performance. Places at the event are limited but those interested can register by following the link on this issue of A Week in the Market.
Jon Guy
Editor
Global Broker & Underwriter
---------------------------------------------------------------------------------------------
A Week In the Market is the free E-zine brought to you by the publishers of Global Broker & Underwriter Magazine
It is completely free.
Please forward this e-mail to your work colleagues or any one else who it may be of interest to.
To register for your own copy click here
---------------------------------------------------------------------------------------------
Editorial-Solutions Ltd
The Annexe
7 Birchin Lane
London EC3V 9BW |
