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Over 100 of the world’s most luxurious yachts will be showcased over the next four days at this year’s Monte Carlo Boat Show, a key event in the super yacht calendar.

And despite recent turbulent economic times, demand for super yachts has remained steady. Each year they get bigger, more expensive and are seemingly equipped with more toys for the super-rich.

High demand

Super-yachts are very expensive and typically built to meet the owner’s individual, specific requirements, according to Mark Feltham, executive director of insurance broker Willis Marine and Super Yachts.

“This demands specialist underwriting and broking to understand the unique operation and service levels required by these incredible craft. In our experience, the Lloyd’s and the London company markets show a deeper understanding of what’s expected both in terms of coverage levels and top-notch claims service,” he says.

What’s new?

Super yachts are arguably the ultimate in privacy and luxury. And by commissioning their own yachts, ultra-high-net-worth individuals can more or less create anything they want, as long as designs fit within safety regulations.

“Super yachts are now much bigger and more sophisticated than ever before – today a yacht would need to be 80 metres or more to get into the top 100,” according to Feltham.

Many of the largest yachts being built today now come with more toys. For example, this year’s show will include the 42-metre yacht Sofia, with its own three-man submarine. The helicopters and submarines that adorn such yachts can also be insured by specialist Lloyd’s underwriters.

Super values

Prices paid for super yachts are on average down on the pre-financial crisis peak but are now more realistic, according to Paul Miller, an underwriter at R&Q Marine. But values for a typical mega-yacht are around Euro20-40m, rising more than Euro200m for the larger vessels, he says.

The big values and bespoke designs make the Lloyd’s market a natural home for insuring super-yachts, explains Miller. Lloyd’s ‘A’ rated financial strength is a particular draw for boat owners, he says.

Voyage of discovery

Another trend in super yachts is where they sail. Increasing numbers of super yacht owners are taking their boats into new waters and beyond the traditional cruising grounds of the Mediterranean and Caribbean.

“The super yacht industry is still young and the second generation of owners now want to explore further afield to places like the North West Passage and heading east into Asia and the Pacific,” says Feltham.

An increasing number of owners are taking their yachts to the Antarctic peninsula, explains James May, Deputy Marine Hull Underwriter.

“Not only does this present increased environmental hazards for the yacht, but there are other factors for the insurer to consider such as lack of emergency assistance or repair facilities in the area,” he says.

Good risk

Despite the high values, the on-board technology and quality of crew make super yachts a relatively good risk for insurers. “Standards for super yachts are phenomenally high, whether it is the quality of professional crew, levels of maintenance or regulation. They hire the best crew and there is no question of cutting corners,” says Feltham.

Vessels above 24 metres are subject to a raft of regulations, covering safety, crew standards and qualifications, and fire precautions. In fact, super yachts are so heavily regulated that they are increasingly becoming more and more like commercial ships, according to Feltham.

“Boats are now so sophisticated that they can see bad weather and hurricanes coming – and because they are permanently crewed, they can quickly move the yacht out of harm’s way,” he says.

Lost at sea

Claims in the super-yacht insurance market are relatively low, although big losses do happen. For example, underwriters were concerned to see the newly built $39m mega-yacht Yogi mysteriously sink just off the coast of Greece in February.

However, the biggest risk to a super yacht is fire, explains Miller. Even a small fire can cause serious damage as these vessels are usually lavishly kitted out. Heavy weather damage is another cause for claims, while collision is another ever present danger, he says.

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According to the IPCC Fifth Assessment Report, temperatures are not rising as quickly as feared. Does this mean we have been given the all-clear?

Karsten Löffler: Sadly not. It is true that average temperatures have charted less of an increase over the past 15 years than in the second half of the 20th century. But that certainly doesn’t mean that we’ve been given the all-clear: quite the opposite.

The oceans have heated up more, the glaciers have retreated more and the past 20 years have seen the sea level rise almost twice as fast than over the last 100 years.

More than 800 scientists who worked on the report agree: more than half of the global warming that has been observed since 1951 is “extremely likely” to have been man-made, making it the dominant cause of the observed warming. Although average temperatures have not risen as quickly as feared over a short-term period, each of the last three decades was warmer than any other decade since 1850.

One conclusion drawn by the scientists, in particular, should serve as a wake-up call to us: even if we could stop the emission of human-induced greenhouse gases completely today, the average global temperature would continue to rise for a very long time. There is a considerable risk of damage that we are now powerless to repair. So taking serious measures today to counteract these trends is a must, not only from an ecological, but also from an economic perspective.

What conclusions has Allianz drawn from the report as an insurer and investor?

Karsten Löffler: Climate change is affecting our customers and is also affecting us, as an insurer. We are witnessing an increase in the number of claims linked to extreme weather events, such as torrential rain or storm tides. These include cases of physical loss or damage, interruptions of operations, illness, etc.

We are also impacted in our capacity as an investor, e.g. due to climate regulation and the costs for the industries affected. At the same time, we are exploiting the opportunities for our customers resulting from the expansion of renewable energy in the form of sustainable insurance products or forest protection.

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Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON), is hosting its 13th Biennial Hazards Conference in Australia next week from 22 to 24 September with the theme of ‘Think Outside the Risk’.

The Hazards Conference aims to stimulate thinking among delegates about big picture trends – beyond the traditional types of risk the industry is familiar with like cyclones or earthquakes. The conference also considers the measurement and mitigation of these increasingly complex sources of risk facing insurers in today’s rapidly changing world.

Conference topics include:
The impact of low probability, high consequence events including geomagnetic storms, pandemics and or a major disruption in food supply – Aon Benfield
Characteristics and Consequences of a 1000-Year Volcanic Eruption – Earth Observatory, Singapore
Enterprise Risk Management for Extreme Events – Coca-Cola Amatil, Australia
Cyber Risks – Implications for the Insurance Industry – SwissRe, China

The sessions are delivered by leading experts from academia, the insurance industry, government and the corporate world. One of the keynote speakers is Professor Warwick J. McKibbin, who has a Vice Chancellors Chair in Public Policy at the Australian National University with over 200 published academic papers. His presentation will explore insights from a global economic model that is used for scenario analysis by major corporations and governments. In particular he will focus on the crisis in Europe, Japanese policy reform and the global implications of the US recovery.

Robert De Souza, President APAC/CEO Australia & New Zealand and conference host, commented: “In recent years a number of events have surprised risk managers. Some of these exposed limitations in modeling capabilities, such as the Thailand Floods, while others have been driven by rapidly changing technology, such as cybercrime. Many new types of risk are arising from the combination of traditional perils like earthquake with our increasingly technological and interdependent society. The 2011 Japan earthquake is an example, which triggered a series of secondary effects that generated losses in ways few imagined before the event. This rapidly evolving risk landscape has led us to develop this year’s theme: Think Outside the Risk.”

Malcolm Steingold, Chief Executive Officer, Asia Pacific for Aon Benfield, added: “The conference is also a catalyst for discussion on the nature of risks facing the insurance industry in our region of Asia Pacific. Understanding the change in demographics and economic drivers is critical when considering new insurance and reinsurance opportunities and planning how to manage that risk to enable profitable growth. Moving forward, effective risk management will entail a combination of advanced modelling tools and qualitative processes to identify risks not properly reflected in quantitative analysis.”

The Hazards Conference has been held every two years since 1989 and the interaction between practice and research has been its hallmark for over two decades.

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According to catastrophe modeling firm AIR Worldwide, three days of intense rainfall in many areas of Colorado has resulted in severe, widespread flooding and collapsed homes.

The greatest threat is to cities along the Front Range, including the city of Boulder and parts of the Denver metropolitan area. Essentially all water bodies in these areas including ditches, canals, and streams are at capacity with many of them at flood levels. Several roads have been washed away and highways blocked due to landslides, hampering rescue attempts.

“Severe flooding began during the evening of September 11, when several areas received up to 2 inches of rainfall per hour,” said Dr. Yucheng Song, senior scientist, AIR Worldwide. “In Erie, which is located in Boulder County, the Erie Parkway was submerged under a foot of water. By the morning of September 12, a flash flood warning had been issued for the areas affected by the Waldo Canyon wildfire last year, where the lack of foliage within the burn scar has increased the risk of excess runoff.”

In Boulder County, flooded creeks include Left Hand Creek, Four Mile Creek, Coal Creek, and St. Vrain Creek. The government buildings in the city of Boulder, as well as the University of Colorado and Naropa University are closed. About 400-500 students and faculty from the University of Colorado have been evacuated from on-campus housing and several homes in the University Hill area of Boulder have reported flooding.

The Meadow Lake Dam at the Big Elk Meadows, southeast of the city of Estes Park, has been breached, causing flood warnings for the areas of Pinewood Springs and Blue Mountain. Water continues to rise today as heavy rains continue, particularly along the Interstate 25 corridor.

Portions of Boulder Canyon, Big Thompson Canyon, Lefthand Canyon, Poudre Canyon are closed. Highway 36 is washed out at the St. Vrain River. Other highway closures due to standing water or landslides are hampering rescue efforts.

According to AIR, this region often experiences heavy precipitation this time of year, but it has also been an unusually wet summer, with over 10 inches of rain inundating parts of Colorado during July and August.

Dr. Song observed, “Currently, a surge of moist air that originated in the Gulf of Mexico has combined with a low-pressure system over Utah and a cold front. The area’s mountainous topography causes the air to cool as it moves upslope, producing more precipitation. This upslope flow will continue over the next few days due to a high pressure system to the east that will keep the system virtually stationary over the next few days.”

By 12:30 PM September 12, several river gauges showed elevated water levels, with at least one indicating moderate flooding. At Boulder Creek, near Boulder, water peaked overnight at 8.88 feet and showed an average flow of 380 cubic feet/second (the average is 64 cubic feet/second), the largest ever experienced in September. Along the Big Thompson River at Loveland, the water stage has since risen above 7.5 feet and is experiencing flows exceeding 2,300 ft/s, the highest in 14 years.

According to AIR, Colorado has a long history of flood events and flood mitigation efforts that have been in place for many years. In Boulder County, these include codes and ordinances that prohibit, or limit, building in floodplain areas. In addition, channelization and detention ponds have been built in the county and several high-risk buildings located in floodplains have been removed. Despite these efforts, the area does have vulnerable structures. Approximately 70% of the residential construction is wood, with an estimated 40% having basements. The presence of a basement increases the risk for contents and building damage. Over half of the commercial buildings are steel and concrete. Unlike residential structures, these buildings often have engineering attention and are built to stricter standards, being less vulnerable but still susceptible to high water flow velocities.

In the U.S., residential flood insurance is typically offered to homeowners only through the National Flood Insurance Program (NFIP). Established in 1986, the NFIP lets residential property owners purchase flood insurance from the government. An extension of the NFIP has been considered—such that the program would be long-term (currently, it undergoes repeated extensions).

According to AIR, commercial business can add flood as an endorsement to their property policy, although it is often subject to sublimits. The experience of Hurricane Katrina revealed that commercial insurers did not always have good information about their exposure to flood and indeed estimates of total industry-wide insured flood values remain hard to obtain.

AIR will continue to monitor the situation in Colorado and will provide additional information as warranted.

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Aon Benfield, the global reinsurance intermediary and capital advisor of Aon plc, today releases the September 2013 edition of its flagship Reinsurance Market Outlook report, which provides a comprehensive analysis of the key variables affecting buyers of reinsurance as they approach the 1/1 renewals.

The report, entitled ‘Post Convergence: The Next USD100 Billion’, reveals how insurers and reinsurers will benefit from the next, and much more transformative, USD100 billion of alternative capital that will enter the reinsurance business over the next five years. The value proposition of reinsurance will improve as the cost of underwriting capital is reduced for reinsurers. The post-convergence market brings unlevered collateralized products that are more accretive to insurers than traditional reinsurance for peak risks.

Reinsurers in the post-convergence market will innovate their capital structures to incorporate the additional USD100 billion of alternative capital flows. Reinsurers will engage in three broad categories of transactions with investors:
a) insurance-linked securities (ILS or cat bonds) to lower the cost of underwriting capital supporting peak tail risks;
b) sidecars to lower the cost of underwriting capital across the portfolio risk spectrum, and
c) formation of asset management divisions that will allow reinsurers the opportunity to accept asset management mandates from investors.

Bryon Ehrhart, Chairman of Aon Benfield Analytics, said: “The benefits of this new capital will begin to extend beyond property catastrophe and mortality risks that are common features of the current ILS market and extend into many other reinsurance lines where loss frequency and severity are more predictable.”

Commenting on the upcoming renewal season, he commented: “The January 1 renewal market for our clients will benefit materially from an excess of traditional reinsurance capacity and new alternative capital flows over light demand growth for reinsurance capacity. Our clients should expect to benefit from a competitive market even if a moderate hurricane season should develop.”

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The influx of third-party capital into the reinsurance market may displace up to $40 billion of traditional equity capital, which could either be returned to shareholders or redeployed elsewhere in the re/insurance market, according to Willis Re, the reinsurance arm of Willis Group Holdings plc, the global risk advisor, insurance and reinsurance broker.

The current trajectory of growth in third party capital suggests it could account for up to 30 percent of the global property catastrophe reinsurance market within a few years, representing approximately $100 billion of capacity, according to panellists at the Willis Re Monte Carlo Rendezvous Press Conference.

John Cavanagh, CEO of Willis Re, commented: “Discussions so far have centred on the effect third party capital is having on rates and the competition it is producing in the property catastrophe reinsurance market. A future influx of $100 billion would, however, have a number of profound consequences. As third party capital enters the property cat reinsurance market, it is going to crowd out conventional equity capital. That equity capital has to go somewhere.”

Cavanagh added that if $100 billion of third party capital enters the reinsurance market, then even allowing for significant returns of capital to shareholders, there could be as much as $20 billion excess equity capital to be deployed.

He continued: “You could think of this as being the equivalent of 10 well capitalised start-up companies, and the effect on the market place would be profound. If capital is redeployed, much of it could go into direct insurance businesses. Many of the hybrid specialty reinsurers are already implicitly going down this path.”

The influx of third party capital, coupled with changes to reinsurance buying patterns and regulatory complexity is leading to growing complexity in the reinsurance market.

Cavanagh said: “Solid analytical advice and market knowledge through intermediation is needed now more than ever.”

Also speaking at the event, Tony Ursano, CEO of Willis Capital Markets & Advisory, said that he expects a very active capital markets and mergers and acquisitions (M&A) environment for the remainder of 2013 and going into 2014.

Ursano said: “On the capital markets side, we expect a very active cat bond calendar, including new and renewal sidecar financings, additional activity around new insurance-linked securities fund formations and strategic partnerships, as well as more new hedge fund sponsored reinsurers.

“We expect activity in the insurance M&A arena to be robust, driven by a number of factors. These include increased CEO and board level confidence derived from higher public valuations, a continued focus on growth, scale and diversification, private equity involvement as both buyers and sellers, and the gradual consolidation of the reinsurance sector driven in part by third party capital involvement.”

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Impact Forecasting, the catastrophe model development center of excellence at Aon Benfield, today releases the latest edition of its monthly Global Catastrophe Recap report, which reviews the natural disaster perils that occurred worldwide during August 2013. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon plc.

The report reveals that billion-dollar flood losses were recorded in China, Russia, Philippines, and Pakistan during August, causing an initial combined estimate of USD10 billion in economic losses.Â

Persistent rainfall caused flooding across much of China during the month of August, with Heilongjiang Province sustaining much of the damage. According to available data from the Ministry of Civil Affairs (MCA), nationwide totals during August showed that more than 260 people died, at least 306,000 homes and structures were damaged, and the aggregate economic loss was at least CNY32 billion (USD5.3 billion).

Across China’s northeast border, torrential rains led to the worst flooding in at least 120 years in Russia’s Far East. The Ministry of Emergency Situations reported that a combined 6,964 homes and 3,762 summer cottages were damaged. More than 627,000 hectares (1.55 million acres) of agricultural land was also submerged. Total economic losses were estimated by the government at RUB30 billion (USD1.0 billion).

Exceptional rains (enhanced by the passage of Typhoon Trami) also fell across the Philippines. At the peak of the event, 60% of metro Manila was under water. A government official estimated overall damages at PHP97.3 billion (USD2.2 billion).

In Pakistan, monsoon rains caused significant flooding that affected more than 5,739 villages nationwide. At least 208 people were killed, 63,180 homes were damaged or destroyed, and 1.4 million acres (567,000 hectares) of crops were submerged. The government estimated economic agricultural losses alone at PKR200 billion (USD1.9 billion)

Steve Jakubowski, President of Impact Forecasting, said: “The flood events during the month of August continues a similar theme that has been observed throughout the year, as the flood peril has proven the most costly – so far – during 2013. Economic losses from flood events have equated to more than 40% of overall losses sustained this year. This highlights the need for insurers to further appreciate the impact of the flood peril through improved analysis and understanding of significant events and utilizing that learning curve to further strengthen the development, and usage, of catastrophe models.”

Meanwhile, Super Typhoon Utor made separate landfalls in the Philippines and China. The Philippines’ Luzon Island incurred damage to 21,153 homes in addition to agricultural and infrastructure economic losses topping PHP1.4 billion (USD33 million). In China, Utor’s remnants prompted days of torrential rains in Guangdong, Guangxi, Hainan, and Hunan provinces. Seventy people were killed as economic losses topped CNY16 billion (USD2.6 billion).

A severe weather event affected the Midwest and the Plains in the United States early in August, killing at least two people. The states of Minnesota and Wisconsin were the hardest-hit, where up to baseball-sized hail and straight-line winds gusting beyond 80 mph (130 kph) were recorded. Total economic losses were estimated at USD1.0 billion, with insured losses in excess of USD625 million.

Further, a series of earthquakes rattled New Zealand’s upper South Island and lower North Island, causing varying levels of damage to buildings and infrastructure. No serious injuries or fatalities were recorded. The main USGS-registered magnitude-6.5 tremor struck near the town of Seddon. The New Zealand Earthquake Commission received 2,945 claims, and overall losses were not expected to be significant.

The Rim Fire became the fourth-largest wildfire in California’s history. At least 111 structures were destroyed (including 11 homes) in Tuolumne County. Total costs to fight the blaze topped USD72 million.

A week of extreme winter weather left 15 people dead in Bolivia, Peru and Paraguay.

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According to catastrophe modeling firm AIR Worldwide, in the Caribbean Sea, Tropical Storm Gabrielle formed on Wednesday night, south of Puerto Rico and the Dominican Republic.

The wave that became Gabrielle was first tracked by the U.S. National Hurricane Center off the coast of Africa back on August 25. It made its way across the Atlantic and remained disorganized until yesterday, when it was declared a tropical depression, then a tropical storm, and then back to a tropical depression. As of 11 a.m. on Thursday, September 5, Tropical Depression Gabrielle is located about 105 miles west-southwest of Puerto Rico. A tropical storm warning was issued for all of Puerto Rico and for much of the eastern portion of the Dominican Republic, but that warning has since been discontinued for Puerto Rico.

“With maximum sustained winds of nearly 35 mph (55 km/h) and a central pressure of 1011 millibars, Gabrielle is currently a relatively weak storm; it is not expected to achieve hurricane status,” said Scott Stransky, senior scientist at AIR Worldwide. “However, Gabrielle is anticipated to bring heavy rains of 2 to 4 inches – and in some isolated regions, rainfall of up to 8 inches – to Puerto Rico and the Dominican Republic, which are vulnerable to flash flooding and mudslides.”

Gabrielle is forecast to continue moving northwest at about 8 mph (13 km/h) today, causing the center of the storm to pass near or over southwestern Puerto Rico and the Mona Passage. By late Thursday or early Friday, Gabrielle is expected to degenerate to a remnant low pressure area.

Stransky noted, “Tropical Depression Gabrielle is not anticipated to cause wind damage, but may cause minimal damage due to heavy rains. Poorly constructed structures (unlikely to be insured) are susceptible to flood damage from Gabrielle’s heavy rains. Insured damage from both wind and flooding is likely to be minimal.”

According to AIR, Puerto Rico’s building stock stands out in the Caribbean, in as much as a large percentage of residential homes are made of reinforced concrete. These buildings typically have flat reinforced-concrete roof slabs, which produce a structure that is very resistant to wind damage compared to other residential construction in the region. In older urban buildings in Puerto Rico there is a greater variety of construction material used. A majority of commercial structures are low to mid-rise buildings, usually of one to six stories. Small apartments, hotels, offices, and other low-rise commercial properties are usually masonry or reinforced or block concrete. A concrete building type unique to Puerto Rico, the “bunker” style, is used for both residential and non-residential structures across the island. Bunker buildings have walls made of reinforced concrete, often reinforced with steel, combined with reinforced masonry.

Heavy rainfall of 2 to 4 inches, with isolated totals of up to 8 inches in mountainous regions, is expected in Puerto Rico, the U.S. Virgin Islands, and eastern parts of the Dominican Republic on Thursday. The National Oceanographic and Atmospheric Administration (NOAA) cautions that this large amount of rain may cause serious mudslides and flash flooding, most notably in regions with mountainous terrain. Gabrielle’s heavy rains are particularly worrisome given that the region’s year-to-date rainfall total is already 24 inches above average.

Stransky concluded, “Gabrielle is expected to degenerate to a remnant low pressure area tonight or Friday, as it moves over the Dominican Republic.”

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As part of Globalsurance’s 2013 International Private Medical Insurance Review, the company has recently revealed the average premium inflation rates for several insurers in Hong Kong.

In the review, Globalsurance examined insurer data for Hong Kong and nine other countries – Brazil, China, Dubai, Indonesia, Kenya, Philippines, Singapore, Thailand, and the UK. Approximately 7,680 points of data were gathered from eight insurers – Aetna Global Benefits, Allianz WorldWide Care, AXA PPP, Bupa International, Globality Health, IHI Danmark/IHI Bupa, Interglobal, and William Russell.

For the eight insurers Globalsurance examined in the study, the last twelve months saw an average of 11.1% inflation of premiums in Hong Kong, 11.0% for the high-cost Asian countries in the study (Singapore, China, and Hong Kong), and 8.3% for all ten countries. The insurer with the highest premiums increase in Hong Kong over the last twelve months was Globality Health at 34.1%, and the insurer with the lowest increase was InterGlobal at 1.6%.

The yearly average inflation rate in Hong Kong for the last five years was 12.55%, in comparison to the 11.5% average increase for the high cost Asian countries, and 9.8% for all ten countries. The insurer in Hong Kong with the highest average yearly inflation rate was, again, Globality Health at 20.9%, and the insurer with the lowest average was Allianz Worldwide Care with 8.2%.

Out of the ten countries in the study, Hong Kong displayed the highest average inflation levels over the last five years. However, Hong Kong is also the only region that has had a steady downward trend; all other regions in the study displayed more unpredictability and variance each year.

The 2013 Globalsurance International Private Medical Insurance Review contains a more detailed analysis of insurance inflation in Hong Kong and the other countries in the study, as well as a review of each of the eight insurers and the the industry as a whole. The full review is available for free at http://www.globalsurance.com/blog.

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Property insurance, the largest category in the South African non-life insurance industry, is expected to grow at a Compounded Annual Growth Rate (CAGR) of 6.6% up till 2017 according to Timetric.

The written premium of the category is forecasted at US$6.41 billion, accounting for 46.3% of the overall non-life insurance written premium. Property insurance will benefit from an increase in the volume of natural disasters affecting the country and a greater availability of credit by banks.

Insurance companies prepare to pay large claims
Insurance companies are expected to pay large claims as the severity of natural disasters increases up till 2017. The government is attempting to improve its relief measures to rely less on international aid. However, floods and hailstorms such as those in Gauteng in 2012, and fires such as those in St Francis Bay, caused losses of US$73.4 million to South African insurers. Santam paid more than three times its average annual catastrophe claims over the past 12 years. Heidi Dias, the Head of Claims at Mutual & Federal predicts an increase in the number of claims “We are likely to see an increase in the number of claims due to the severity of floods.”

Banks will offer more credit as the economy improves
Despite a decline during the economic downturn, property insurance claims are expected to gain sales volume up till 2017. Individuals that purchase property by taking out a bank loan are required by the lenders to purchase property insurance. With the market recovering gradually and the availability of credit improving, the property insurance category is expected to pick up momentum.

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Over the next decade, as countries such as China, India and Brazil focus on feeding their massive populations, crop insurance is expected to play an increasingly important role.

It is estimated that global agricultural production will need to increase as much as 60% by 2050 in order to meet people’s growing need for food. Over the next decade, as countries such as China, India and Brazil focus on feeding their massive populations, crop insurance is expected to play an increasingly important role. It is estimated that global agricultural production will need to increase as much as 60% by 2050 in order to meet people’s growing need for food.

“There’s an increasing demand for getting a lot of crop production in China to feed the animals that are being demanded by the consumers in China,” says AIR’s assistant vice president Jack Seaquist.

Agricultural insurance premiums nearly tripled between 2005 and 2011 to an estimated $23.5bn. North America remains the largest buyer of crop insurance, but China is quickly catching up.

“China is already the second largest agriculture market in the world, behind the US,” says James Few, chief executive of Aspen Re. “It overtook Europe recently which is a sign of really dramatic growth in that marketplace. Agriculture is already a very sophisticated and significant market in China and it’s expected to get bigger.”

For global re/insurers looking to grow their presence in these markets there are numerous challenges to overcome.

Dearth of data

Underwriting agricultural risks is highly technical, a process that is increasingly aided by the use of crop insurance models. But it is difficult for experts to come up with models in markets that lack the necessary data that would aid their development.

“The challenge is always data… simply, do you know enough about the risk?” explains Julian Roberts, executive director of agribusiness and weather risks at Willis. “If you’re used to underwriting in North America then you will be accustomed to a fabulous wealth and depth of data on which you can crunch numbers; equally there are some mature models upon which you can rely.”

“By contrast, the Chinese and Indian agricultural markets are relatively young markets in this context and hitherto reinsurers have not really benefited from either the same depth of data or the scope of modelling that they would otherwise merit,” he continues.

“It’s been a real challenge for underwriters to extend their reach into some of these emerging agricultural insurance markets and really understand what they’re seeing, he adds. “However, risk modelling packages are now emerging for the Chinese market. We are currently evaluating these as they are released and are impressed with what we have seen so far, so the tools of the trade are now slipping into place.”

In recent months the Chinese insurance regulator CIRC has approved more local insurers to underwrite agricultural insurance in the country. More than ten insurers, including PICC and China Life insurance Company have been granted licences to operate crop insurance businesses in provinces such as Sichuan and Shandong.

In March, the Chinese government implemented a new agricultural policy to encourage the development of agriculture insurance. The government heavily subsidises agricultural insurance premiums in an effort to encourage take-up. Data shows that insurance premiums jumped to $3.9bn in 2012, up by 28.2% year-on-year.

Chinese crop model

Cat modeller AIR Worldwide recently developed a cat loss model for China which provides a probabilistic approach for determining the likelihood of losses to the country’s major crops: corn, cotton, rapeseed, rice, soybeans and wheat. Drought, floods and typhoons are the leading cause of loss in China.

The model captures the severity, frequency and location of adverse weather events, taking into account weather variables (such as rainfall and temperature), soil conditions and crop-specific parameters.

“It was quite a bit different in China and quite a bit more complex than in the US,” explained Seaquist in an interview with BestDay. “It also has an issue of there not being a lot of data about the crop insurance programme.”

“So our model is a physical model of the crop damage caused by drought, flood and typhoons,” he continued. “This is all based on our Agricultural Weather Index which looks at the relationship between these weather events over time. It allows us to assess what losses will be paid at a very local level and to assess the different aspects of the programmes.”

He explained how the timing of events affected the level of damage to the crop depending on where it was in the growing season. “Payments are based on the damage to the fields as opposed to the ultimate yield, as we have in the US,” he added. “In China it’s all based on damage to plants so we have a very large country and we model at the county resolution.”

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• Further compensation for hire charges of £10,720.74 agreed (Wintripp v AXA Insurance), £1,558.75 (Wood v Wiedenhoft) and £125 (Collick v Rohodes)
• Incurred appeal costs are estimated by Accident Exchange at £50,000 (Wintripp v AXA Insurance), £30,000 (Wood v Wiedenhoft) and £30,000 (Collick v Rohodes)
• AXA makes global settlement proposal
• Further Court of Appeal guidance on a number of cases imminent

AXA has conceded three further cases where retrials were ordered in respect of claims which were originally contaminated with, and then decided on the basis of, dishonest Autofocus evidence.

The three settlements highlight what Accident Exchange says is the manifest failure of the AXA strategy when, in the case of Collick and Rhodes, for example, an incremental payment of just £125 has cost the insurance giant an estimated £30,000 in legal costs.

The two other compromised cases (Wood v Widenhoft and Wintripp v AXA insurance) resulted in further damages being paid to Accident Exchange of £12,280 plus interest but transferred to AXA an estimated liability of £80,000 in costs for the two cases.

Following these developments, Accident Exchange confirmed that AXA has now tabled a revised global settlement proposal at a figure which matches an offer made by Accident Exchange to AXA, and declined by them, almost a year ago.

In what Accident Exchange describes as ‘an unattractive piece of drafting’, AXA’s settlement offer appears to seek to protect Morgan Cole, its former Solicitors, from any action or claim arising from its involvement in the deployment of the fraudulent Autofocus evidence.

Morgan Cole was named by Accident Exchange during the Court of Appeal test cases a year or so ago and was also criticised by Accident Exchange in a recent case in the Chester County Court where summary judgment was given. In that case, evidence was presented to the Court showing that Morgan Cole was aware that the Autofocus evidence that it served the first time around was dishonest.

Steve Evans, Chief Executive of Accident Exchange, commented:

“Why AXA would want to protect a firm of solicitors when it knows that firm has deployed evidence on its behalf knowing it to be dishonest and that the evidence was likely to, and in many cases did, deceive the Court, is beyond me. On the plus side, it appears that AXA has at last recognised that the rates evidence from SG Consultancy and Ravenstone on which it is currently relying has more holes in it than our local golf course. It’s a shame it has taken so long and cost several million pounds in legal costs for the penny to drop.”

He continued:

“AXA may now recognise that the reason Autofocus made its evidence up was because it had no alternative; there was no evidence of comparable hire rates that supported AXA’s opposition to thousands of valid hire claims then. Moreover, there is no credible evidence that it has found now, having had five or six years to find it!”

In a press release issued by AXA announcing that it has tabled its global settlement proposal, the company says that it has made the offer because ‘the burden of evidence in credit hire cases is stacked in favour of credit hire companies.’

Evans responded:

“Let’s be absolutely clear on this.”

“AXA could have paid these claims at discounted GTA rates many years ago but chose not to do so. It decided to embark on a litigation strategy, supported by fabricated and dishonest evidence from Autofocus, which deceived the Courts in thousands of cases. It had no criticism then of the evidential burden it had to meet to defeat a hire claim. Now, having been given a second chance to produce new and honest evidence, AXA has clearly failed and criticising the evidential burden it cannot now properly meet sounds like sour grapes.”

A number of Autofocus appeals involving AXA, Zurich and LV are still awaiting directions in the Court of Appeal where Lord Justice Aiken has indicated that he may give further guidance for their disposal in the next week or so.

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One year ago, the controlled explosion of a major World War II bomb in the north of Munich caused quite a stir. The bomb was found close to the Allianz Group head office. A 500 kg bomb was just successfully defused in Hanover. Some 9000 people had to temporarily leave their homes. These aerial bombs are a legacy of war not only limited to Germany.

Towards the end of the Bavarian school holidays, residents in Munich’s Schwabing district were subject to a bomb alert. Once instructed to leave their homes, the police patrolled the eerily empty streets and asked the last remaining pedestrians and residents to evacuate the restricted zone. The controlled explosion finally took place in the early evening, after several attempts to defuse the bomb had failed. The spectacular images posted on YouTube shortly afterwards showed fire balls and burning roofs and received thousands of hits. Despite numerous broken windows and doors, the damage to property was limited. However, lost profits for shops and restaurants near the incident zone were larger.

Bombs from World War II are still regularly being found in Germany. Even almost 70 years after the war, many unexploded bombs have yet to be discovered. Most are found during construction work, or when prospective property buyers get a detailed aerial analysis done. Estimates suggest that up to 20 percent of all World War II bombs failed to explode. So there is a constant risk of finding an unexploded bomb – pretty much anywhere.

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• Russian oil pipeline company OAO AK Transneft has announced an open tender for the sale of its 98.9% stake in Russia-based Insurance Co. TRANSNEFT (IC TRANSNEFT).
• We have only limited information about the details of the transaction at this time and are uncertain about the transaction’s impact on IC TRANSNEFT’s prospective capitalization and competitive position.
• We are therefore placing our ‘BBB-‘ long-term and ‘ruAAA’ national scale ratings on IC TRANSNEFT on CreditWatch with negative implications.
• We expect to revise the CreditWatch within the next two-three months, after we receive more information regarding the details of the transaction and when the tender period ends, expected in late September 2013.

Standard & Poor’s Ratings Services said today that it had placed its ‘BBB-‘ insurer financial strength and counterparty credit ratings and ‘ruAAA’ Russia national scale ratings on CJSC Insurance Co. TRANSNEFT (IC TRANSNEFT) on CreditWatch with negative implications.

The CreditWatch placement follows the announcement of IC TRANSNEFT’s ultimate parent, OAO AK Transneft (Transneft), that it plans to sell its 98.9% stake in IC Transneft.

The ratings on IC TRANSNEFT continue to reflect our assessment of its stand-alone characteristics and incorporate one-notch uplift to reflect support from Transneft. We are maintaining the one notch of support despite the disposal plan, given the established and ongoing strong business ties between IC TRANSNEFT and Transneft; all corporate risks of Transneft are insured with IC TRANSNEFT and we believe the parent has incentive to provide continued support during the sales process. We also note that the sales process is in a preliminary stage and the main terms of the sale and whether it will proceed will likely not be known before the fourth quarter of 2013.

The CreditWatch placement also reflects our limited information about the details of the transaction at this time and our uncertainty regarding the transaction’s impact on IC TRANSNEFT’s prospective capitalization and competitive position.

We will monitor the developments relating to the sale of IC TRANSNEFT. We expect to resolve the CreditWatch within the next two-three months, once we have more clarity regarding the details of the transaction, such as structure and terms of the deal, potential acquirers, or whether the sale of the insurer will proceed.

We could affirm or lower the ratings on IC TRANSNEFT following our review. We could remove the one notch of support from Transneft if we considered that the willingness of the parent to provide support had reduced. If the transaction is completed, we would remove the one notch of support because IC TRANSNEFT would no longer belong to Transneft.

The ratings will depend on IC TRANSNEFT’s future ownership and the potential implications of the transaction on the company’s stand-alone characteristics, in particular its future capitalization and competitive position.

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Impact Forecasting, the catastrophe model development center of excellence at Aon Benfield, has launched a new flood scenario-based model for Mexico to quantify financial losses caused by river flooding. Aon Benfield is the global reinsurance intermediary and capital advisor of Aon plc (NYSE:AON).

Flooding in Mexico over the last two decades has caused human and financial losses across the entire country, with severe events in 1993, 1998, 1999, 2005, 2007 or 2010. As such, flood in Mexico is considered to be one of the most significant natural perils, alongside earthquake and hurricane.

Now, the new model means that loss estimates for these events can be calculated to gauge the financial impact of their potential reoccurrence. Equally, scenarios can be generated for possible future events, for example, based on maximum possible magnitudes of a flood.

The hazard part of the catastrophe model is based on an event footprint that outlines the extent of the flood. This enables insurers to obtain a more realistic estimate of their specific exposure.

The new tool reflects both locally-sourced data and the latest developments in hydrology and flood model development. Key features include:

Modelling for the eight most exposed states, covering an area of 575,000 km2
Digital Terrain Model (Source: INEGI Internet Site: www.inegi.org.mx) with a cell size of 30×30 meters
Two sets of vulnerability curves with 100+ engineering based curves and 12 combination curves (engineering curves enhanced by real claims data).Historical dataset consisting of six floods: September 1993, September 1998, October 1999, October 2005, October-November 2007 and September 2010 + their Low and High options
Michael Hughes, CEO of Aon Benfield in Latin America, said: “As demand for catastrophe insurance and reinsurance increases in Latin America, catastrophe models need to develop alongside. In comparison to models in global peak catastrophe zones, the models in Latin America face the challenges of fewer historical events, reduced underlying data and less development resources. In response, Impact Forecasting is stepping up by increasing its focus on models for the region – notably for its flood, earthquake and tsunami risks.”

Vaclav Rara, flood model developer at Impact Forecasting, added: “Floods in Latin America have recently caused widespread damage. Therefore Impact Forecasting’s main goal is to bring more understanding to the insurance industry of this peril and help insurers to better manage their risk using the latest technology and hazard data.”

The new model is part of a suite of new scenario models to generate loss estimates for specific historic events. It is integrated in ELEMENTS – Impact Forecasting’s proprietary loss calculation platform – which allows the application of insurance conditions at varying levels and also quantifies different sources of uncertainty.

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Following Santander’s research showing that the cost of getting kids ready to return to school has risen a quarter to £224, Duncan Finch, executive managing director at Legal and General Insurance, comments on the unexpected costs of raising children :

“Few parents consider how much it costs to bring up a child and as Santander’s research shows, the money needed is continuing to rise. Often parents are surprised to find out how much this costs and we found that while on average new mums expect it to be £5,400 a year, in reality it is 59% more, amounting to £8,580 a year*. The average amount needed to raise a child to the age of 18 is now £154,440; a 15% increase from 2011 and three times the amount of 2001*.

Statistics like this, and Santander’s show how the fragile economy and increased living costs mean that it’s becoming more and more expensive to raise our children. Therefore it is vital that parents are fully aware of the potential costs so they can make sure they have an adequate financial plan in place for their family.

Although unpalatable, it is also important for parents to plan for the worst by having a will and protection cover otherwise, your loved ones may not be left as financially secure as you would like.”

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ACE Group today announced management promotions within two of its key divisions in Continental Europe as it plans for the future of its property and casualty insurance business.

David Snanoudj, currently Property Manager for ACE in France, has been appointed Regional Manager, Property for Continental Europe. In this role, David will have profit centre responsibility for ACE’s property portfolio across the region. He will oversee all aspects of underwriting and will drive strategy including the profitable development of the portfolio.

David will remain based in Paris. He will report to Jeff Moghrabi, Chief Operating Officer, Continental Europe at ACE and to Jarrod Hill, Executive Vice President and Head of International Property for ACE Overseas General. He replaces John Neeson, who has chosen to retire from the role.

In addition, Grant Cairns has been promoted to the role of Regional Manager, Financial Lines for ACE in Continental Europe. Grant will have profit centre responsibility for ACE’s financial lines business across the region, lead strategy for the portfolio and continue to drive its profitable expansion. Grant was previously Vice President and Assistant Product Manager, Financial Lines for ACE’s international operations.

Grant will continue to be based in London and will report to Jeff Moghrabi and to Timothy O’Donnell, Executive Vice President, Financial Lines, ACE Overseas General. He replaces Nadia Cote, who was recently promoted to the position of Country President for ACE in France.

Jeff Moghrabi, Chief Operating Officer, Continental Europe, at ACE, said:

“David has done a terrific job of managing our property business over the past four years in France, our largest market in the region, in a very competitive marketplace. He also brings to the role extensive experience in broking and portfolio management across our core customer segments – including multinational and middle-market business. These will be great strengths as we continue to chart challenging market conditions and step up our customer focus across Continental Europe.

“Grant’s detailed underwriting knowledge will be invaluable as we continue building our financial lines capabilities across Continental Europe, not least in professional indemnity and private company D&O. He also brings a strategic and international perspective – including recent emerging markets experience – which will be of huge value for us. We welcome him to our regional team.

“I would also like to thank John Neeson for the excellent job he has done of overseeing our regional property portfolio over the past four years, including the important portfolio review work which he has successfully launched and executed. We all wish him well in his retirement.”

David Snanoudj has spent his 13 year career in the insurance industry, with experience gained in both the broking and underwriting sectors. He has been with ACE in France for four years, where he has successfully managed the financial performance and growth of the property portfolio. He joined the company from AIG Europe in 2009, where he performed a similar role. He previously spent several years serving in various technical and management roles with insurance broker Marsh.

Grant Cairns has 16 years of insurance industry experience and has specialised in financial lines for 13 of these, in both underwriting and broking roles. He joined ACE ten years ago from insurance broker Willis and has held positions of increasing responsibility for ACE in Australia, including profit centre management of ACE’s financial lines portfolio in Australia and New Zealand and, more recently, assisting with financial lines product management internationally, outside North America.

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A refreshing summer rain, a menacing thunder storm or a full-blown hailstorm – even the weather experts can only make an educated guess at what that particular cloud in the sky really has in store.

They do, however, agree that severe rain storms and the damage they cause are on the increase – particularly in regions that are already at risk. When looking back at the end of the summer, the newspapers will report on “results battered by hail” if the season was a severe one. Some precautionary measures can, however, help to minimize hail damage.

“It goes without saying that we are pleased about every natural catastrophe that does not happen,” says Clement B. Booth, Member of the Board of Management at Allianz SE. “We are very interested in good preventative measures and provide our customers with corresponding advice. However, when a storm does happen, we are there for our customers – as an insurer, that’s quite simply our job.”

Hail forecasts not easy, but not impossible

Radar forecasts can provide hour-by-hour images of thunderstorm cells forming and can generate storm warnings. The strength of the radar signal depends on the volume and form of precipitation – strong signals suggest that hail is on its way.

“Hail usually comes hand-in-hand with a violent thunderstorm,” says Dr. Markus Stowasser, meteorologist and climate expert at Allianz SE Reinsurance. “But even when using modern forecasting methods, hail forecasting still bears considerable uncertainties.”

Paying attention to storm warnings can determine whether you are hit by a hailstorm “out of the blue” or whether you know at least a few hours beforehand that a hailstorm might, or might not, be on its way.

Hailstones measure at least 5 mm in diameter – smaller stones are sometimes called ice pellets. Hailstones with a diameter of 2.5 cm or more can leave small dents in the bodywork of cars, or damage in roof tiles or house facades (see graphic below). In extreme cases, hailstones can be the size of tennis balls, baseballs or grapefruits. Despite these comparisons, hailstones are not round and smooth, instead these chunks of ice have a rough crystal-like structure.

The main hail season in Europe, for example, is the summer: most hailstorms happen between May and September. They can also occur at other times of the year, but these storms then tend to be less heavy.

Hail damage: damaged plants, dented cars, damage to facades and roofs

This summer saw major hailstorms across Europe, in countries such as France, Germany and Switzerland. The hailstones from the July storms in Germany were the size of walnuts and left thousands of damaged cars in their wake.

After severe storms, Allianz units often set up mobile claims stations in the affected areas to ensure that customer claims are settled as quickly and unbureaucratically as possible. Partial own damage insurance picks up the costs associated with repairing dented cars.

Hail is the weather occurrence that causes the most damage to cars. Hail damage caused to a car can cost thousands of euros. For a company, the loss can be significantly higher. If hail affects an entire new car storage yard, the damage for the auto manufacturer can be immense. The agricultural sector, too, can be hit hard depending on the time of year, especially if plants are still young and vulnerable or if entire greenhouses are damaged by hailstones.

The risk of hail damage is rising

There are various reasons for the increase in the number of claims caused by extreme weather. First, numerous studies prove the link between global warming and more extreme precipitation events. Second, the volume of insured assets is on the rise – especially in Asia, which is experiencing strong growth in population figures and prosperity levels. In addition, technical developments such as solar panels mounted on roofs or housing insulation can make residential buildings more susceptible to hail damage than they were in the past, meaning that smaller hailstones can cause more damage.

Hail can occur anywhere in the world. But there are certain regions that experience more severe, or more frequent storms: namely the US, central Europe, western China and the north of India. The climatic conditions that produce thunderstorms and hail are very similar in these regions: air rises up a mountain range, intensifying the updrafts required for hail to form. If very warm, damp masses of air form at the same time, this produces extreme weather events like tornados, thunderstorms or hail.

Severe hail events which can cost over one billion euros in losses occur approximately every 150 years. Experts refer to this as “return periods”. However, two similarly severe weather events can occur within a shorter space of time, as was the case with the two “century floods” in central Europe (2002, 2013).

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According to pan-European research conducted by Allianz in close co-operation with Allianz Global Investors, many 50 to 70 year olds are uncertain if they can maintain their current standard of living in retirement, and will need to build additional savings to achieve their goals.

The study looked at retirement finance of 1,402 respondents, aged 50-70 years, living across seven European countries: Austria, France, Germany, Italy, Netherlands, Switzerland and the United Kingdom (UK). It found that half are uncertain if they can maintain their standard of living in retirement with many needing to build additional savings to maintain their existing standard of living. The younger respondents tended to have an altogether more pessimistic outlook. This group were particularly concerned about maintaining their standard of living due to the consequences of pension reforms and the impact of the financial crisis on their financial and pension wealth. Only 40% of 50-to-54-year-olds think they will have the same standard of living in retirement. In contrast, 53% of those aged 60-70 are optimistic or already enjoy a relatively comfortable standard of living.

Inflation is cited as the biggest financial risk in retirement in all countries (except Austria). In Germany and UK this is particularly apparent with 60% of Germans and 65% of Britain’s citing inflation as the greatest financial concern to potentially impact their pension. However, when tested on their understanding of the effects of inflation, respondents in the UK and the Netherlands tended to overestimate and Austrians tended to underestimate its impact. French, German and Swiss respondents were most realistic about the effects of inflation.

Despite some people misinterpreting the risk that inflation poses, the research showed the majority of 50+ respondents feel they are well informed about financial matters and use a wide variety of information sources. However, while there is a wealth of information available, what matters to pension savers is its usefulness so that investors can both understand it and know how to act in response to it.

Swiss most satisfied with retirement planning

Nearly two thirds of the respondents said they are satisfied with their retirement planning, only 8% said to be dissatisfied, Swiss respondents are the most satisfied at 81%, with only 2% “dissatisfied”). The overall level of satisfaction with retirement planning is significantly lower in France (46% “satisfied” and 11% “dissatisfied”) and Italy (54% “satisfied” and 14% “dissatisfied”).

The survey also reveals substantial national differences with regard to the preferred payout method upon entering retirement: Half of Swiss respondents prefer life-long monthly or annual payments compared to only one quarter to one third in the other countries. Austrian and German prefer by far one-off lump sums (40% and 37% of the respective respondents) other the 50+ generation in other countries.

UK respondents stand out when it comes to investment decision making. Nearly half of the respondents from the UK said that they make their own investment decisions without the assistance of an investment professional or advisor, Only Dutch respondents with 42% are nearly as self-directed in their decision making. In Switzerland the share of respondents not seeking external advice is lowest with 23%.

Planning for a better standard of living

Dr Renate Finke, Senior Economist in the International Pensions unit at Allianz and author of the study, comments: “Retirement planning is crucial to ensure ease of living in later life, but many of those surveyed admitted to making mistakes in their approach, with one third of respondents saying they started planning too late and one in four highlighting that they did not save enough. Saving for a pension is arguably more challenging in the current economic environment of financial repression. In order to maintain their existing standard of living, many will people will need to build additional savings either through particular retirement savings plans or general individual saving. Hopefully the experience of those about to enter or in retirement should motivate the younger generations to start thinking about saving for their retirement.”

Nick Smith, Head of Retail Sales (ex-Germany) states: “Pension savers face an uncertain landscape including inflation risk, volatility and the challenges posed by reform processes. These are forcing people to adapt to changing situations. People saving for pensions need to look at what lessons can be learned from the 50+ generation, especially as the last decade has shown that it is a difficult task to factor in the various investment risks.”

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As Britain welcomes the birth of a new royal heir, we take a fascinating journey through Lloyd’s archives and uncover the market’s long history of insuring risks associated with Royalty – including a policy insuring against Queen Victoria having twins.

Revealing the Blue Book

In the course of delving into Lloyd’s archives to research its links with Royalty, Lloyd’s curator Alan Brown revealed the so-called Blue Book. It records unusual insurances said to have been underwritten at Lloyd’s, including several relating to Royalty.

The Blue Book was compiled by J M Machie, the Superintendent of the Room at Lloyd’s between 1920-1931 through access to insurance policies and his contact with brokers and underwriters in the market. The book has never been published, all information therein should be consumed with a degree of caution, however its contents make for a fascinating insight into Lloyd’s at that time.

Coronation fever…

The coronation of George V, the grandson of Queen Victoria who reigned from 1910-1936, was a lavish affair at the zenith of the British Empire. Celebrations took place across the Empire, while in London the streets thronged with a patriotic British public eager to watch the coronation procession.

According to the Blue Book, large amounts of insurance were purchased from Lloyd’s underwriters by owners of property or sites along the procession route. The insurance covered the risk of postponement or any change in route, covering individuals for the loss of revenue from selling seats and stalls.

The Silver Jubilee of George V in 1935 was also said to have given rise to much insurance at Lloyd’s. Policies covered cancellation of the celebrations due to rain and legal liabilities from the collapse of stands and accidents.

Going even further back, in the year of Queen Victoria’s Diamond Jubilee in 1897 Lloyd’s underwriters insured the jewels of an Indian Maharajah for £200,000 and also a charitable scheme supported by the then Prince of Wales Edward VII. The policy eventually paid a claim of £16,000 when the scheme to sell £50,000 “hospital stamps” failed to reach expectations after postal authorities refused to postmark the unofficial stamps, therefore making them less attractive to collectors.

Queen Victoria was also the subject of a policy written by “Dicky Thornton” (1776 – 1865) who the blue book describes as “one of the liveliest sparks ever to write risk at Lloyd’s”. Thornton is believed to have insured against the risk of Queen Victoria having twins at her first child bearing. The identity of the policyholder is not revealed.
And coronation jitters

The 1936 coronation of the then unmarried Edward VIII caused some businesses to enquire at Lloyd’s about possible insurance. A Lloyd’s underwriting member, Colonel Sandeman, told the House of Commons that insurance had been sought against the marriage of Edward in the run up to his coronation. A well-known manufacturer of mugs wanted to insure against the cost of manufacturing commemorative coronation mugs with the two heads rather than the one. If a marriage took place before the coronation two portraits would be necessary on the mugs instead of one. And this would mean that all the expenditure would be wasted. Of course there was a wedding but no coronation.

Edward VIII, later the Duke of Windsor, only reigned from 20 January to 11 December 1936 after he was forced to abdicate. Shortly after his coronation Edward proposed to American divorcee Wallis Simpson, a union that conflicted with his role as the head of the Church of England. It is not recorded if the claim was paid.

End of an era

The death of a much loved monarch can instigate a long period of mourning. In the early Twentieth Century it was also a major blow to commerce and purchasing insurance against such risks was once common place.

UK insurers were said to have paid out several millions of pounds upon the death of Edward VII, who gave his name to the fast changing times of the Edwardian era. Towards the end of his life in 1910, Edward VII was in poor health, leading a number of interested parties to take out insurance against his death.

The New York Times, May 8, 1910, tells of a last minute dash to Lloyd’s by one dry goods merchant to buy cover for his stock over fears of the Kings imminent demise. The newspaper said the drapery industry was particularly affected because large stocks of coloured summer cloth would go unwanted in the long period of mourning. Much of the loss to the trade was said to have been covered by insurance.

The New York Times noted that almost all insurers and Lloyd’s underwriters had to pay claims, including those for the large number of events cancelled as a result of the King’s death on May 6. Other losses insured against included a fall in the value of stocks and shares and the transfer of Duchy lands and official incomes.

Lloyd’s underwriters said losses were no larger than those frequently sustained in the course of ordinary business. One told the New York Times that the total risk at Lloyd’s related to the King’s passing was no greater than the insurance of a large ship.

Returning Monarchs

The Blue book outlines a series of insurance policies connected to Kaiser Wilhelm II.A grandson of Queen Victoria and one-time frequent visitor to the UK.

During the war Lloyd’s insured buildings against Zeppelin airship and airplane bombing raids on London. The first Wilhelm policy is cover for during the week of the Kaiser’s birthday (Jan 27th) as it was feared raids might be used to celebrate the wedding.

After Germany’s defeat, Wilhelm fled to exile in Germany and Lloyd’s was asked by US policyholders to provide insurance to cover the risk that the Kaiser could return to the throne in Germany. An American forecaster had predicted that Wilhelm would return to power in November 1925.

Lloyd’s underwriters provided thousands of pounds of cover through the so-called Kaiser Wilhelm policies (apparently there was a policy on display in the old Lloyd’s Library, so it may be in the archive.) Lloyd’s also holds a signed letter from the Kaiser acknowledging the bestowal of the Lloyd’s Silver Medal upon the Captain and members of the crew of the German liner Bulgaria for saving that vessel in rough weather in 1899.

Machie wrote in the Blue book that the purpose of his collection of “Strange Insurances” is to familiarise readers with the little known uses to which insurance can be put in the everyday affairs of life.

However the editors of lloyds.com would like to repeat Machies warning to readers: “It cannot be emphasised too strongly that the Committee of Lloyd’s do not regard with favour any risks which might come under the heading of “Freak Insurances”, as they convey a wrong impression of what the main and extensive business of Lloyd’s chiefly consists.

“Also that the principle of insurance is utterly opposed to that of gambling, since the former aims merely at protection, whilst the latter has solely in view the speedy acquisition of gain.”

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