Intelligent Insurer


EDITORIAL Time to come together


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Intelligent Insurer—ISSN 2041-9929 Cover image: © Swiss Re


There are also concerns about the situation in the US, which came remarkably close to


default thanks to political disagreements over the terms around raising the country’s debt ceiling. This uncertainty was reflected in the recent downgrade of the US by rating agency Standard & Poor’s.


This turbulent economic environment means that insurers and reinsurers need to be careful


where they choose to invest, while also ensuring that their money is working hard for them. They also need to ensure that they are taking advantage of every financial instrument at their disposal. This will require them to build even stronger relationships with their partners in the banking industry.


The ethos must also extend to their core business of underwriting risk. Although there


has not been a single event big enough to trigger a hard market, there are now enough contributory factors which, combined together, must surely mean an increase in rates. Given the problems on the investment side of the business, most reinsurers will see this as a necessity.


The Monte Carlo Rendez-vous presents an opportunity to come together and discuss the


issues facing the industry. Through working more closely in partnership with both clients and business partners, the industry will stand a better chance of weathering the challenges that lay ahead. After all, the whole is greater than the sum of its parts.


September 2011 | INTELLIGENT INSURER | 3 S o far, 2011 has proved to be a mixed bag for insurers and reinsurers alike. Despite suffering substantial losses in the first two quarters of the year, reinsurers are now


reporting a slight hardening of the market. Although there has not been a single event big enough to trigger a true hard market, many in the industry seem hopeful that rates are now at least moving in the right direction.


This hardening of rates has been aided by the release of the new US hurricane model by


Risk Management Solutions (RMS version11). While some reinsurers still don’t appear to have taken this into account yet in their pricing, many are hoping this will help facilitate a continuing upward trend in some rates.


There was also some good news for insurers that the Solvency II deadline may be put back


to 2014. For companies still scrambling to deal with a high volume of claims in the first half of the year, this would certainly be welcome.


However, there are still a number of issues that should concern the industry. Top of the list will be the economic crises brewing in both Europe and the US. As political


leaders try desperately to gain control of the problems facing a number of members of the single currency in Europe, alarms have been raised over the affect a worsening of this situation could have on insurers and reinsurers with money tied up in the affected countries.


While many insurers and reinsurers have already limited their exposure to Greece and could withstand a default, there are concerns over what would happen if the contagion should spread further across the continent to countries such as Portugal, Spain and Italy.


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