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Issue 109 - 9th July 2010
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Brokers get on their bikes for gruelling trans-America race
A team from UK broker Jardine Lloyd Thompson (JLT) are celebrating after completing a mammoth cycle race across the United States and finishing third. The 8-strong team competed in the Race Across America (RAAM) a bicycle race from the Pacific to Atlantic coasts and raised in excess of £200,000 for charities in the process. The team, which called itself, Convicts of the Road, was one of two British teams competing in the 8-person category of the 2010 Race. The team included five JLT employees, Genentech’s Director of Risk Management, and an underwriter from Hannover Re. The other British team in the category was the Sir Steve Redgrave Crew led by the multi-gold medal Olympian himself. Convicts of the Road completed the 3,005 mile race from Oceanside, California to Annapolis, Maryland in a time of 6 days, 6 hours and 44 minutes, finishing third overall in their category – the Sir Steve Redgrave Crew, the only other British team in the same category completed the race in 7 days 3 hours and 42 minutes. En route the team, which was racing day and night, ascended in excess of 100,000 feet, crossing both the Rocky Mountain and Appalachian Mountain ranges. Team leader Charlie Pearch, said: “RAAM is not a tour across the USA it is a bone fide race, and as such conditions are intense, crew and riders suffer an acute sleep deprivation, and our aim of mere completion quickly became one of winning a podium spot after Sir Steve Redgrave announced that he felt his team were going to achieve third place. We set an original speed target of 18.2 mph, but playing to our rider strengths and rolling riders on/off the road every 20 minutes allowed us to generate a faster continual speed and maintain an average of 19.95 mph. We monitored the Redgrave position at every time station, and as we crossed the country we knew that we had the faster legs because despite getting lost for 40 minutes we still retained a 3 hour advantage on them and this grew to 5 hours by the halfway point. Our main goal though was to raise considerable funds for four charities, two UK based and two US based. Again we have exceeded expectations and whilst funds are still pouring in we will exceed the anticipated £200,000.” The rider team was supported by a fleet of 4 vehicles, manned by a crew of 12 which included more JLT employees, the President of US wholesale broker Avreco, Inc and an underwriter from Ace Medical.
Research identifies current global risk hotspots
New research by risk intelligence and ratings firm Maplecroft has identified Haiti and Mozambique as the countries most vulnerable to economic losses from natural disasters while classifying a number of industrialised economies, including Italy, Japan, China, USA, Spain and France, as “high risk” environments for investors, insurers and business. The firm has issued its Natural Disasters Economic Loss Index (NDELI), which evaluates the economic impact of earthquakes, volcanic eruptions, tsunamis, storms, flooding, drought, landslides, extreme temperatures and epidemics between 1980 and 2010. The index measures the risk of economic losses from damage costs and deaths caused by natural disasters to reflect both the direct economic impact of natural disasters on property and infrastructure, plus the indirect economic impacts on populations. “To provide an accurate picture of the global situation the NDELI has been split into two rankings; one measuring the risks to the 87 countries that suffer a high frequency of natural disasters; the other evaluating the 116 countries that experience less than one event per year,” it added.
Seven countries are rated at “extreme risk” in the high frequency index, with Haiti (1), Mozambique (2), Honduras (3), Vanuatu (4), Zimbabwe (5), El Salvador (6) and Nicaragua (7) topping the ranking. However, the industrialised economies of Italy (18), Japan (23), China (25), USA (29), Spain (37) and France (48) are all in the “high risk” category, whilst India (51), UK (53), Germany (54) and Canada (55) are rated “medium risk.” “When economic losses are taken as absolute figures, it is predominantly the industrialised countries, such as USA and China, that shoulder the greatest costs,” explained Maplecroft Environmental Analyst, Dr Anna Moss. “However, when losses are calculated as a percentage of GDP, it is developing countries that are most exposed. For example, the USA’s losses from the 1997-1998 El Niño were $ 1.96 billion, or 0.03 percent of GDP, whereas in Ecuador, economic losses were $ 2.9 billion, or 14.6 percent of GDP.” “The Natural Disasters Economic Loss Index is developed annually by Maplecroft to identify risks to assets and is especially relevant to the insurance and reinsurance industry, which has a large interest in preparedness and response to such disasters,” said Professor Alyson Warhurst, CEO of Maplecroft. “Climate change has the potential to raise global temperatures and affect weather patterns - the fear for insurers is that this will lead to more frequent and extreme hydro-meteorological related losses.” Swiss Reinsurance Co. estimates that the cost of natural disasters to the insurance industry in 2010 could reach $110 billion worldwide. The earthquake in Chile, on February 27, is estimated to cost $8 billion alone, which is 3.53% of the country’s GDP, whilst Windstorm Xynthia in France may cost insurers as much as €2 billion, equal to 0.13% of French GDP. This year’s Atlantic hurricane season is also set to be “extremely active” according to the U.S. National Oceanic and Atmospheric Administration, which is predicting 14 to 23 named storms.
Fears grow that further Solvency II delay will kill scheme
The man charged with driving the Solvency Ii compliance for UK insurance group RSA has said he believes the Solvency II timetable cannot afford to be further delayed. David Innes Head of Economic Capital at RSA was speaking during a panel debate at a one day European Insurance Update event hosted by rating agency Fitch on the issue of Solvency II. The panel was asked whether they felt the regulations, which will determine the level of solvency required by EU underwriters, would be implemented on 1 January 2013? Mr Innes said: “There is an expectation that QIS 5 will be followed by QIS 6 and maybe QIS 6a, b, and c,” he said. “We are still unsure as to the ability of the regulations to deliver the full implementation of Solvency II by 1/1/13, but we are certainly not telling our teams internally that.” He added: “I believe that we have to deliver Solvency II by January 2013. Any delay will force it into the long grass and it may never come out. I think one of the biggest issues facing firms is that good actuaries are in short supply, which may have an effect. In my view what happens in 2011 will be crucial.” Tom Keatinge Managing Director, Insurance Management at JP Morgan added: “The one risk I can see to the implementation timetable is over any potential for collateral damage which may arise. By collateral damage I mean the impact on the ability of business to obtain cover and if it does throw up issues then we may see a delay while the issues are debated and solutions found.” From Fitch’s point of view the biggest issue is the use of internal capital models which can be agreed with the regulators. Clara Hughes, Associate Director of Fitch’s Insurance Group said the challenge would be the fact that the individual internal models none of which would be alike would be agreed with individual national regulators which may well have their own views on what they require from the models. “We will need to unpick the data and how it was compiled to be able to rate individual underwriters on a comparative basis,” she added.
Ariel enters Brazilian market
Bermuda based Ariel Re. (Ariel Re), has announced it is to open a representative office in Rio de Janeiro, Brazil after receiving regulatory approval as an admitted reinsurer from the Brazilian insurance regulator, Superintendência de Seguros Privados (SUSEP). The firm said its initial focus in the country will be on surety and trade credit reinsurance, which will be underwritten through its branch office in Zurich, Switzerland, and managed by Thomas Rothenberger. Mr. Rothenberger said: "We are pleased to begin operations in Brazil, which is an important part of the Latin American market. We look forward to working with our customers to identify profitable business opportunities both within Brazil and throughout the region.” Tom Hulst, Chief Executive Officer of Ariel Re added, “The establishment of a representative office and our admitted status demonstrates our commitment to building our operations in Brazil and is a further step in the development of our business throughout Latin America.”.
Jon Guy
Editor
Global Broker & Underwriter
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