Insurance Journal - The long-term implications of the September 11 terrorist attacks for the insurance industry "will likely be far greater than the ultimate sum of the paid losses," said Larry Mayewski, A.M. Best Co.s Executive Vice President and Chief Rating Officer. "They will also dramatically change how the industry conducts business in the future." In an Oct. 2 conference call with hundreds of participants, Mr. Mayewski called the terrorist attacks of Sept. 11 "unprecedented" in scope and complexity. . . . The direct and indirect impact of this event may not be fully understood for several years," he said. "The insurance industry will be able to meet its commitments," said Mr. Mayewski, noting that A.M. Bests most recent estimate of losses stemming from the attacks remains in excess of $30 billion.
Monday, October 08, 2001
National Underwriter - Under U.S. regulatory requirements, Lloyd's next month will have to fund 100 percent of its gross liabilities from the World Trade Center attack--a price tag of £1.3 billion ($1.9 billion at current exchange rates), or the equivalent of 12 percent of the market's 2001 capacity. Even Lloyd's officials agree this could cause a short-term liquidity problem, but Lloyd's Chairman Sax Riley emphasizes that all requirements will be met. (Under U.S. regulations, all alien reinsurers are required to fund 100 percent of reinsurance gross liabilities, which are kept in the Lloyd's American Trust Fund in New York. After declaring gross liabilities, Lloyd's and other reinsurers must make a cash deposit to the trust fund by Nov. 15.)
Thursday, October 04, 2001
Insurance Journal - Lloyds has received a barrage of questions on its total exposures and its liquidity following the release of its projected net loss figure of $1.94 billion as a result of the attacks on the U.S. (See IJ Website Sept. 27). It also faces further claims from an explosion in Toulouse, France on September 21. Fitch rating agency, which prior to the announcement had downgraded Lloyds by a factor of two from A+ to A-, said that Lloyds faced gross liabilities of £7 billion ($10.25 billion), and questioned whether the amount of reinsurance calculated in achieving the net figure would be fully paid. Lloyds spokesman Adrian Beeby told the IJ last week that "reinsurance had been a major part of our analysis." He indicated that the vast majority of coverage was placed with companies outside of the Lloyds market and that "ninety percent of it is with companies rated "A" or better by A.M. Best and Standard & Poors."
Wednesday, October 03, 2001
Insurance Journal - The International Accident and Health division of Willis Group Holdings has developed a range of products to assist organizations in securing war risks and malicious risks coverage. The group announced that cover can be provided to clients on either a country specific or worldwide basis depending on their situation or need. The policies would protect persons working in or traveling to high risk areas, such as expatriates, aid workers or media personnel. Nicola Fraccalvieri, who heads the Willis unit, stated that " We estimate that less than a third of all organizations which have some degree of exposure to war, terrorism, and malicious acts have the appropriate coverage in place." He believes that in light of current events such coverage is no longer optional, but essential.
Wednesday, October 03, 2001
Insurance Journal - Since the morning of Sept. 11, A.M. Best Co. has been gathering public and private information in order to assess the financial impact as well as the nuances of insurance coverage associated with the tragic attacks. To date, industrywide loss estimates are broad, ranging from $30 billion to $70 billion. Many specific estimates provided by companies directly affected by these events have been subject to significant upward revisions. A.M. Best believes this trend is likely to continue, given the discrepancies between gross estimates before reinsurance and net losses reported by specific companies in different segments of the industry. Although such disparity in loss estimates is typical in the days following the catastrophic events, the tragedy that occurred on Sept. 11 is unique and unprecedented in both its scope and complexity of potential losses.
Tuesday, October 02, 2001
National Underwriter - Is it ethical for insurance professionals to be subject to performance-based incentives, and would disclosure to those who are served by the professional avoid any potential problems created by the incentives? That was the question posed in my last column on May 21. The original suggestion for this question came from an independent adjuster and expert witness who believes that such performance-based incentives are indeed unethical. He also provided a copy of a California insurance regulation that makes compensation based on any one file or group of claim files illegal. There are at least four challenges in addressing these two questions. • First is the broad-based nature of the question. It applies not only to the company employee adjuster (the subject of the original question) but also to public adjusters, plaintiffs attorneys, agents, brokers, underwriters, premium auditors, loss control representatives
Monday, October 01, 2001
Insurance Journal - AMR Corp., the parent of American Airlines, said on Tuesday that insurers are canceling its coverage for claims caused by acts of war, terrorism, sabotage, hijacking and other similar events effective Sept. 26. According to a Reuters report, AMR, the parent of TWA and American Airlines and the worlds largest carrier, said in a regulatory filing that its insurers have offered replacement coverage. The airline plans to obtain the replacement coverage before existing coverage is terminated. The report notes that American will be charged significantly larger premiums for this replacement coverage, and this new coverage will be in a substantially reduced amount for claims not involving aircraft passengers.
Thursday, September 27, 2001
Insurance Journal - American International Group announced its intention to offer coverage to airlines for war and hijacking (terrorist) risks through its member companies with total limits up to $1 billion. The decision comes in response to the severe economic disruption in the airline industry, not only in the U.S., but also in most other countries as a result of the abrupt cancellation of war and terrorist risk coverage. (See IJ Website Sept. 20), and subsequent moves by the governments of most countries, including the U.S., to guarantee sufficient funds to assure that coverage is provided in the short term. (See IJ Website, Sept. 24). The U.S., which was the hardest it by the tragedy, has committed to assure coverage for the next 6 months. Other countries have agreed to cover premium raises for shorter periods.
Wednesday, September 26, 2001
Insurance Journal - The governments of the U.S., the U.K. and the European Union rode to the rescue of the airline industry over the weekend when they announced separate decisions to help carriers cope with increases in premiums covering war risks and terrorist exposures, thus averting a global grounding of most flights, that could have begun at midnight tonight. The London insurance market, which insures a large proportion of the worlds commercial aviation, gave seven days notice of its intention to cancel coverage, but stated that replacement policies could be obtained - at drastically higher rates (See IJ Website Set. 20). The rest of the worlds aviation insurers announced similar plans.
Monday, September 24, 2001
Insurance Journal - The National Association of Mutual Insurance Companies (NAMIC) issued the following comment on a letter recently sent by the House Committee on Financial Services to the president of the National Association of Insurance Commissioners. (See insurancejournal.com National headlines, Sept. 20, 2001) "We appreciate the Financial Services Committees interest in the well-being of the insurance industry and appreciate the offer of assistance. NAMIC is confident that its member companies will honor their contracts and will proceed to adjust and pay claims in a responsible manner just as they have done when other disasters have struck this country. Insurance employees are patriotic Americans and, after firefighters and police, are generally the first people to respond in a crisis, as they have been in this tragedy."
Friday, September 21, 2001