A Controlled Flight into Terrain?

Contributor: Benjamin Weber, Head of Aviation, PartnerRe
Date: 12/1/2007
Stringent Limits and cover management, coupled with adequate rating levels, have kept the booming U.S. General Aviation insurance sector flying a strong, steady course for many years. However, due to actual or perceived pressure from new entrants, most General Aviation ­segments are now entering a downward flight trajectory. Restored ­discipline in individual and market underwriting is indispensable to avert potential disaster.
Tags: U.S., Aviation

Anything Wrong with Being 2,500 Years Old?

Contributor: Sara Thomas, Client & Corporate Communications, PartnerRe. With thanks to Michiel Starmans, Jo Willaert, and Keith Jones.
Date: 12/1/2007
2,500 years ago, the Ancient Greeks sat down and thought about what to do if cargo was intentionally destroyed in order to save a ship and the rest of its cargo. They decided that, ‘that which has been sacrificed for all, shall be made good by the contribution of all’. And this very fair thinking has clearly stood the test of time because it’s the logic behind ‘general average’, the procedure that is still used today to distribute intentional losses made to protect the common insurance interests on a loss inflicted ship.
Tags: Europe, Marine, Aviation

Come Rain or Shine

Contributor: Thomas Heintz, Chief Underwriter Agriculture, PartnerRe; Sabine Pistor, Specialty Lines Pricing Actuary, PartnerRe
Date: 12/1/2007
Digging into just one aspect of the field of hail pricing, we present the results of a study into the use of ‘risk coefficients’ – ratios that reflect the relative vulnerabilities of crop types to hail – asking, what are their advantages and, given these, why the inconsistent global application and values?
Tags: Non-specific, Agriculture

When Risk Management Systems Fail

Contributor: Patrick Thiele President & CEO
Date: 12/1/2007
As we progress through the fourth quarter, we continue to hear bad news in the financial sector. The sub-prime debacle and subsequent credit crisis continues to impact the financial and re/insurance sectors. The issue has accelerated in the fourth quarter with ongoing volatility and reductions in liquidity for any kind of sub-prime asset. Stocks directly or indirectly related to the crisis are also dropping. And unfortunately, there is likely more to come.
Tags: Non-specific, Risk management & reserving, Capital markets & structured products, CEO commentary

A Handle on Claims

Contributor: Carol Ann O’Dea, J.D., Senior Vice President and Claims Manager, PartnerRe.
Date: 10/1/2007
On September 11, 2001, terrorists destroyed the World Trade Center (WTC) in a single, coordinated attack involving two planes that struck the WTC’s twin towers within minutes of each other. The WTC site and lease, purchased by Silverstein Properties from the Port Authority of New York and New Jersey for U.S. $3.2 billion in July 2001, was insured under a layered Property insurance program. In the Property program, 24 insurance carriers provided a total coverage of up to U.S. $3.5 billion per “occurrence.” However, as of September 11, with only one exception, actual insurance policies had not been issued – only binders, slips and confirmations of insurance were in place. These contained various wordings, opening the door to critical questions such as: was this one “occurrence” or two; what were the terms governing each of the 24 insurers’ coverage; and, how much were the insurance companies obligated to pay Silverstein Properties?
Tags: Claims, U.S.

A New Product Era

Contributor: Brian Tobben, SVP, New Solutions, PartnerRe
Date: 10/1/2007
As the line blurs between the capital and reinsurance markets, a new product era is upon us and reinsurers are becoming increasingly ­flexible in the way that they assume risk for their cedants. Given the similarities between these markets, there are identifiable aspects of risk assumption that will strongly influence how the new products shape up medium term.
Tags: Non-specific, Capital markets & structured products

Preparing for Higher Limits

Contributor: Emmanuel Becache, Senior P&C Underwriter, PartnerRe; Lea Nefussi, P&C Underwriter, PartnerRe.
Date: 10/1/2007
The current minimum statutory Motor insurance limits in the EU were set in 1984 by the 2nd EU Motor Insurance Directive (84/5/CEE). In the meantime, claims inflation and the wide range of minimum limits adopted in EU countries, have prompted a revision of the minimum limits, as outlined in the 5th EU Motor Insurance Directive (2005/14/CE). The extent to which the 5th Directive impacts a specific insurance market will depend on the current limits offered in that market: ranging from no or little impact in countries that offer unlimited coverage for bodily injury, to potentially significant impact in countries that have remained with the former minimum limits. For example, the minimum limit for combined bodily injury and property damage per event will be multiplied ten-fold, from € 600,000 to € 6 million for countries that choose the second option of the directive.
Tags: Europe, Motor, Regulation, Agriculture

Sub-prime Parallels

Contributor: Patrick Thiele President & CEO
Date: 10/1/2007
The U.S. and world financial systems are experiencing a ’shock loss’, characterized in the re/insurance industry as a loss event that can lead to substantial financial difficulty. This initially arose out of the sub-prime mortgage asset class, but soon spread to other asset-backed securities. Billions of dollars of investors’ money is disappearing in a wave of defaults and additional billions of dollars worth of securities will be ‘marked to market’. No one currently knows the extent or the magnitude of the problem.
Tags: Non-specific, Risk management & reserving, Capital markets & structured products

Class Acts

Contributor: Raymond-Marc Courgeau, Senior Underwriter P&C, PartnerRe
Date: 4/1/2007
Devices to deal with collective lawsuits in Europe have, where they exist, tended to be complex, narrow in scope and under-utilized. To enhance process efficiency and open up access to legal compensation, the European Union’s 1998 directive (N° 27) required member countries to adopt new laws for group litigation. In the intervening period, the legal landscape in Europe has shifted, with many countries adopting or considering the introduction of new group proceeding devices.
Tags: Europe, Litigation

Lightening the Load

Contributor: Alexis Iglauer, Life Client Partner, PartnerRe
Date: 4/1/2007
Within a particular country, there are usually a large number of primary providers for annuity products and these products tend to be defined and shaped by the relevant legal and tax regime. This standardization makes comparisons fairly simple for the consumer and enhances the commodity nature of the product. While in some countries the state offers only a subsistence pension, in others a state or company pension will make up the bulk of a pensioner’s post-retirement income. Due to these differences, the extent to which longevity risk is spread between the public and private sector varies from country to country.
Tags: Europe, Life & health

Unearthing Construction in the U.S.

Contributor: Maria Amelio, Senior Vice President, U.S. Program Business, PartnerRe
Date: 4/1/2007
Developments in the U.S. construction and contractors’ risk environment continue to make this a difficult class to underwrite. Exposure analysis is complicated by regulatory and contractual issues within both the construction and insurance industries, and by physical changes in the way that construction itself is carried out – in particular with regard to the use of new products and to construction projects in less developed geographical areas.
Tags: Property, U.S.

When Change is Afoot

Contributor: Patrick Thiele President & CEO
Date: 4/1/2007
The January 1, 2007 non-life renewal results are in. Despite a good portion of premiums leaving the reinsurance market, the renewal was orderly, with a reasonable level of competition. But on January 2, substantial change was afoot. 2006 proved to be a record year ...
Tags: Non-specific, Risk management & reserving, Capital markets & structured products, Regulation, CEO commentary