December 2011/3

Despite the threat of further creep from the New Zealand and Japanese earthquakes earlier in the year, 2011 is on course to fall just short of overtaking 2005 as the most expensive year ever for the (re)insurance industry, according to estimates from Swiss Re.

The government of New Zealand has been left the unappetising task of picking up the unpaid catastrophe bill from quake-hit mutual insurer AMI after Insurance Australia Group Limited (IAG) purchased the firm's on-going operations.  

A decision by the UK commercial court has set a legal precedent under the "follow the leader clause" - binding insurers on a policy to the decisions made by the lead underwriter.

Officials in Brazil have hit Chevron and Transocean with an $11bn (20bn reais) lawsuit and asked a court to halt the companies' operations in the country following an offshore oil spill at Frade Field near Campos.

The US Securities and Exchange Commission (SEC) has filed a suit in a DC court asking for the Securities Investor Protection Corporation (SIPC) to be made to act to protect investors that lost money through the alleged Ponzi scheme administered by Allen Stanford's US broker-dealer.

Marsh & McLennan Companies (MMC) is suing an Enstar-owned run-off company over alleged unpaid claims from the broker's huge errors and omissions (E&O) bill for the year 1999 to 2000.

The Argentinian subsidiaries of (re)insurers Ace and Chubb have been placed under credit rating review by Moody's following more nationalistic regulatory orders in the country.

Platinum Underwriters has joined the growing band of reinsurers that have received permission from the Florida insurance regulator to post reduced collateral on business written in the state.

The system of state regulation in the US creates "profound" inefficiencies and should be replaced by more uniform national insurance regulation, the Risk and Insurance Management Society (Rims) has said.

London market trade bodies have agreed a new model non-risk transfer terms of business agreement (Toba) for managing agents, insurers and brokers.

The European Parliament has pushed back a vote on the final rules for the crucial Omnibus II directive until April 2012, meaning insurers may face a further four months without additional clarity on some technical details of Solvency II.

It has been a hard slog fundraising for some of the new insurance-linked securities (ILS) fund managers over the past six months, with only a couple managing to attract new capital by year-end.

Aggregate cat bond deals have done well this December as investors placed large orders for the double-digit premiums on offer.

Trade bodies the Association of British Insurers (ABI) and the Lloyd's Market Association (LMA) have welcomed UK consumer watchdog the Office of Fair Trading (OFT)'s probe into private motor premiums.

While the US escaped the severity of unexpected loss that afflicted New Zealand, Japan and Thailand in 2011, the frequency of events has led some underwriters to reassess risk perception in the world's largest insurance market.

Last week a number of European insurers were hit with downgrades, as rating agencies continue to aggressively reconsider their credit assumptions in light of the Eurozone debt crisis.

Former heavyweight broker Catherine Murray has parted company with insurance IT solutions provider VIPR, The Insurance Insider has learned.

Over the next three years Lloyd's will seek to shake the market's reputation of being leaden-footed in the face of change as it continues to encourage the diversity on which its success is based, the Corporation has said.

With (re)insurers' balance sheets under attack from all sides, CEOs are taking an active role in driving more diversified investment strategies in search of improved returns.

Bermudian reinsurer PartnerRe revealed last week that it would add $88mn to its estimated losses from the Tohoku earthquake in the fourth quarter after deciding to reserve the full limit of its largest Japanese client's cover.

Lloyd's CEO Richard Ward wrote to the CEOs of managing agents last week to reassure the market over Kiln-managed Tokio Marine Syndicate 1880's outsized exposure to Thai flood losses.

Houston-based subcontractor Cameron International has agreed a $250mn settlement with BP on the 2010 Deepwater Horizon oil rig explosion and spill, in the latest development in the ongoing saga.

Last week a consensus began to emerge over the Thai flood losses as Scor revealed its loss estimate, which is based on a similar industry loss figure to that of major reinsurer Swiss Re.

Fresh evidence has emerged of a turn in US commercial insurance pricing, but not at a sufficient level for rate increases to keep pace with industry inflation.

Omega's formal rejection of Haverford's revised 74p per share partial bid for the company came after a three week struggle that has plunged the London-quoted (re)insurer's future back into uncertainty.

Willis last week became the latest of the big three global insurance brokers to embrace a technological management information platform to enhance its global placing operations and revenues with the launch of Willplace.

US broker Brown & Brown has ended an acquisitive year by agreeing a major deal to buy programme manager and managing general agent (MGA) Arrowhead General Insurance Agency for $395mn from its private equity owners.

Beale to Canopius; I Fenwick...; New sparks at Chaucer; Berkley hire; Friedhelm non-event; Vipond to FSA; THB hires from Aon; Chubb hires; Swinton board guillotined; Torus surety

The tragic sinking of the Kolskaya oil rig near Sakhalin Island is set to cost the London reinsurance market only a relatively modest $100mn.

Insurance Australia Group (IAG) has increased its loss notification for February's New Zealand earthquake from A$1.9bn to A$2.9bn as its vast reinsurance programme renews with 100 percent rate increases, The Insurance Insider can reveal.

It is only a fool who believes he can avoid major market losses or overall loss trends. We all know that the law of large numbers means that pricing becomes less of an art and more of a science as greater amounts of data come into play.

As underwriters and brokers embark on a frenzied last few days of negotiation for the 1 January renewal season, firm order terms for US property cat programmes are generally falling in line with the rate increases of 5-10 percent seen at mid-year.