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Catastrophe risk modeling firm AIR Worldwide (AIR) released updates to its Extratropical Cyclone and Earthquake Models for Europe. Both models were significantly expanded to include additional European countries and provide a consistent and comprehensive assessment of the extratropical cyclone and earthquake risk throughout Europe.

 “AIR Worldwide offers complete and robust extratropical cyclone and earthquake models for Europe,” said Dr. Jayanta Guin, senior vice president of research and modeling at AIR Worldwide. “With the expanded regions and enhancements to these models, insurers and reinsurers now have a unified view of risk across Europe. These updates represent the culmination of a multi-year investment in research and development at AIR, and innovation in modeling the two most significant perils for this region.”

Version 13.0 of the AIR Extratropical Cyclone Model for Europe includes six additional countries. The model now captures the financial impact of European wind storms on 18 countries: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Ireland, Latvia, Lithuania, Luxembourg, Netherlands, Norway, Poland, Sweden, Switzerland, and the United Kingdom.

These additional countries supplement the major enhancements that AIR introduced in spring of 2010 to virtually all components of the extratropical cyclone model, including:

–        Explicit modeling of storm clustering, an important phenomenon in Europe that must be accounted for when managing wind storm risk. Including the effects of clustering, which was observed during the 1990, 1999, and 2005 seasons, provides more realistic estimates of occurrence (single event) and aggregate (multiple events in a season) losses and allows the model to better reflect the correlation of risk between countries.

–        Improved techniques for modeling wind speed at a fine scale and a more realistic treatment of smaller, high frequency storms using data obtained from more than 1,500 historical events dating from 1958.

–        Support of additional construction/occupancy combinations, business interruption coverage, and auto and forestry lines of business.

 “To provide companies with the ability to assess the risk from winter storms in all their manifestations, the AIR model combines a scientifically advanced view of the hazard with a sound approach to vulnerability assessment that recognizes and accounts for regional variations in building codes and construction practices,” said Dr. Guin. “These enhancements—combined with the 2011 expansion to include six additional countries—result in a comprehensive and detailed view of European wind risk.”

Version 13.0 of the AIR Earthquake Model for the Pan-European Region includes 24 additional countries. The model now captures the effects of shake damage on properties in 30 countries: Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Israel, Italy, Latvia, Lithuania, Luxembourg, Monaco, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Sweden, Switzerland, Turkey, and the United Kingdom. Due to the expanded domain, the model will now be called the AIR Earthquake Model for the Pan-European Region.

Other enhancements to the model:

–        The hazard module features a region-wide and fully harmonized seismicity model for improved estimation of risk to policies and portfolios that span more than one country—a capability not provided by single-country models. This new seismicity model is based on the most recent research regarding historical earthquake magnitudes and changes in stress as a result of recent earthquakes, most notably the 1999 Izmit earthquake.

–        A physical model that provides a better assessment of earthquake risk in areas with limited historical data and better accounts for the potential impact of earthquakes on previously unknown faults.

–        The model’s damage functions have been revised to account for the latest European research on the vulnerability of structures in each modeled country, local construction practices and materials, and the evolution and enforcement of building codes.

“The new AIR Earthquake Model for the Pan-European Region captures the complex seismicity of Europe,” said Dr. Guin. “This model has been developed to meet the wide spectrum of earthquake risk management needs of the insurance industry and has been extensively validated using data from more than 60 historic earthquakes across Europe.”

Source : AIR Worldwide Press Release

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Richard Coello has been promoted to the role of Assistant General Manager responsible for Professional Risks for Travelers Insurnace Company.

In this role, he will be responsible for all aspects of professional and financial lines, including financial institutions, management liability, office, media & entertainment and developing new products for the professional risks market.

Previously, Mr Coello was Senior Underwriter for Financial Institutions and D&O at Travelers. Prior to joining Travelers in June 2008, he was with Ace Global Markets for several years.

He will report to Jonathan Davies, General Manager of Travelers Professional Risks and Specialist Risks.

“I am delighted to announce Richard’s promotion to lead this key area of our product set. Richard successfully launched our financial institutions team in 2008 at a time when only the best underwriting standards would suffice,” said Mr Davies.  “It is an exciting time for the financial lines team, which is further strengthening its highly experienced senior leadership team complemented by the arrival earlier this year of Steve Pollock as Chief Underwriting Officer (CUO) and David Sawyer as PI Assistant General Manager.”

Source : Travelers

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Scottish private sector activity expanded solidly in August, as manufacturing production increased at the sharpest pace for four months according to the latest Bank of Scotland PMI. However, the overall rate of growth slowed somewhat since July due to the weakest monthly rise in service sector activity since January.

Despite both higher activity and the steepest rise in demand for four months, employment fell for the first time in seven months. Meanwhile, output prices increased only moderately as Scottish firms absorbed a large proportion of sharp cost inflation.

Signalling an eighth consecutive monthly expansion of Scottish private sector output, the seasonally adjusted Bank of Scotland PMI read 52.7 in August, down from 53.5 in July. Growth remained solid and above the UK average rate of expansion, despite slowing slightly as service sector activity growth moderated.

The latest expansion in total activity predominantly reflected higher levels of new business. Boosted by a robust rise in new manufacturing orders, total new work in Scotland increased at the fastest pace for four months. Dampening overall growth, however, was only a marginal increase in new business at service providers.

August saw a marginal decline in Scottish private sector employment, ending a six-month period of job creation. The decrease was underpinned by job cuts made in the service sector, which were the sharpest since January. In contrast and reflecting a robust increase in new business, goods producers recruited additional staff at a solid pace.

With capacity down and new orders up in August, backlogs of work accumulated for the first time for four years. Although only modest, the build up of outstanding business in Scotland contrasted with declines in all other UK areas covered by PMI data, except for London and the North East.

Cost pressures remained elevated in August, as inputs including utilities and a range of raw materials climbed in price. Moreover, cost inflation in Scotland exceeded that in all other UK regions. Despite sharp input cost pressure, prices charged increased only modestly on average in August. This primarily reflected the actions of service providers, who raised tariffs only slightly as competition intensified.

Donald MacRae, Chief Economist at Bank of Scotland, said:

“With an eighth consecutive month of growth, this is an encouraging PMI. Growth remained solid bringing the PMI Output Index second only to London within the UK. This is a welcome result, suggesting the private sector of the Scottish economy grew, albeit slowly, throughout January to August this year.

“Manufacturing output accelerated at the sharpest rate for four months, while new orders received by manufacturing firms increased for the eighth consecutive month. There was a particularly welcome rise in new export orders which extended the current sequence of growth to ten months.

“Although the services sector saw growth, it was the weakest monthly rise in activity since January. The rate of expansion in services has slowed over the summer, with employment falling for the third month in a row. Nevertheless, the Scottish economy is displaying resilience in the face of a global slowdown so far.”

Source : Bank of Scotland

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Munich Re’s board member Torsten Jeworrek announced contract rates should rise for the renewal period of January 2012 when compared to 2011.

For instance, rates for reinsurance policies covering natural disasters, offshore energy and motor will see increases while rates in some other commercial and private business lines will remain flat, Jeworrek said at the company’s annual press conference in Monte Carlo, which was webcast.

Global reinsurers, brokers and ratings agencies are gathering this week in Monte Carlo to discuss current developments for rates that reinsurers are asking from their customers, the primary insurers. The world’s largest reinsurers are also discussing the latest trends for the sector. This year, the annual gathering, which gets kicked off Sunday when international credit debt ratings firms present their outlook for the sector, coincides with the 10th anniversary of the 2001 terrorist attack on the World Trade Center.

Rates for policies covering natural disasters in the U.S. have recently increased by 10%, and Munich Re expects that to continue, Jeworrek said.

Traditionally, reinsurance policies for Europe and some parts of Asia are renewed Jan. 1, which is also the renewal date for most industrial companies.

Policies covering Japan and Korea are renewed April 1; and policies for parts of the U.S., Australia and Latin America are renewed July 1.

Jeworrek said Munich Re is mulling changes to policies covering contingent business interruption that was caused by natural disasters, such as the earthquake, as one of the lessons learned from the earthquake and subsequent tsunami that hit northern Japan in March.

The events in Japan –for which insurers could face a bill up to $39 billion according to risk-modelling firm Eqecat– have shown a high accumulation of contingent business interruption risks due to numerous supply chains to Japan from carmakers and auto parts makers in Germany, Europe and the U.S., Jeworrek said, adding that the loss from business interruption is still unknown.

Munich Re is considering putting loss limits in place for business interruption caused by individual natural disasters, so that the policyholder would make suppliers replaceable or share a higher burden of the loss, Jeworrek said. Munich Re won’t cancel any policies and would like to get third-party opinions about the proposed policy change before introducing it, he said. The change would require a transition period of 12 to 18 months.

Munich Re also said it is developing a new software aimed to help recognize such interaction earlier.

Frankfurt, September 11, 2011 (Dow Jones)

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Recent research from Which? shows that a majority of consumers do not think the banks (76%) or the Government (71%) have done enough to prevent another 2008 financial crisis.

And, with just 14% of people saying that the banks have learnt their lesson from the credit crunch, seven in ten consumers (71%) back proposals to separate retail from investment banks, which would safeguard the deposits of customers and essential retail banking services if one of the UK’s big banks was to go bust.

Ring-fencing, one of the key recommendations expected from the Independent Commission on Banking (ICB) in its final report on Monday, has been under concerted attack from some in the banking industry.

Seven in ten people (71%) are not confident that the Government will act in taxpayers’ interests when it considers reforms to the banking industry. Which? is calling on ministers to quickly set out a timetable for implementing the ICB’s recommendations.

As well as measures to prevent another financial crisis, the ICB will also publish recommendations to improve competition in retail banking.

Which? chief executive, Peter Vicary-Smith, says:

“Consumers want to see a firewall between retail and investment banks so if there’s a repeat of the financial crisis the banking services they rely on day-to-day will be protected.

“The Government has a big choice to make on banking reform. It can act in the interest of taxpayers, consumers and the wider economy so that we all benefit from better banking services. Or ministers can act in the narrow interest of banks that want to use their retail customers’ deposits to fund their risky investment businesses

“By immediately putting in place a timetable for meaningful reforms, the Government can reassure the public that banks haven’t been let off the hook.”

Source : Which?

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Aon Benfield’s 2011 Insurance Risk Study has just been released. The study, now in its sixth edition, provides underwriting volatilitybenchmarks that are a valuable resource to chief risk officers, actuaries and other economic capital modeling professionals, as well as comprehensive analyses of notable specific risks to the industry. Its data spans 47 countries and key business lines representing more than 90% of global property-casualty insurance premium.

Again this year, the study ranks global underwriting volatility by line of business and by territory. It reveals that property remains substantially more volatile than other major lines. In Germany and Spain property is nearly twice as volatile as motor, the most stable line; in the U.S., property is nearly three times as volatile, and in France, it is four times as risky.  Overall volatility parameters are in line with last year’s study, but they do not yet reflect 2011’s significant catastrophe activity.

The study also provides a detailed summary of U.S. risk parameters and reserves, and highlights that despite recent favorable development in the P&C industry’s reserves position, reserve risk remains a potential significant source of leveraged cyclical uncertainty and a continued threat to insurer solvency. Based on historical variance in reserve patterns the study estimates that aggregate U.S. industry reserve development of more than USD60bn can occur once every fifteen years, or roughly once per cycle – consistent with experience from the last two soft markets.

Meanwhile, it ranks the top 50 global markets by P&C Gross Written Premium (GWP), and reveals that the U.S. market leads the way with a GWP of USD455.98bn and 3.1% insurance penetration (defined as the ratio of premium to GDP), followed by Japan (USD76.93bn), Germany (USD67.79bn), the U.K (USD62.66bn) and France (USD59.76bn). China ranks 6th, with a GWP of USD45.83bn and 0.8% insurance penetration.

International premium growth remains a challenge for the industry with none of the top ten countries showing an increase in insurance penetration. Absolute premiums decreased in five of the top ten countries, and, other than China, showed only modest increases in the others. Combined with depressed investment yields, insurers remain under significant pressure to expand their top line results.

The 26-page study includes a chapter dedicated to innovations in crop insurance modelling; a chapter focusing on achieving optimal performance in the Solvency II regime, and a section examining recent developments in the hedging of risk in variable annuity insurance products.  It also analyzes the link between firms’ price to book ratio and their prospective return on equity (ROE), showing that companies with more stable earnings over time have higher valuations for a given ROE.

Stephen Mildenhall, CEO of Aon Benfield Analytics, said: “The Insurance Risk Study is based on many years of modeling innovation, and actuarial research work from Aon Benfield’s 400-strong global Analytics team. It offers a series of valuable benchmarks that will be of use to a wide range of risk professionals, and provides analyses of the key insurance risk considerations for insurers, as well as a macroeconomic perspective to highlight the wider issues influencing and affecting our industry.

The Analytics team continues to develop a range of tools to address key challenges in specific markets, such as the Aon Benfield Crop Reinsurance Solution (ACReS), which assists insurers to manage their agriculture exposures, and Pathwise, the industry’s fastest variable annuity hedging product. Capabilities such as these ensure that our firm continues to bring real differentiating value to our clients.”

Source : Aon Benfield

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New York City’s St Peter’s Church gathered more than 200 of Aon colleagues around their CEO Greg Case for the commemoration of the 9/11 10th anniversary.

Reverend, clergy, Aon colleagues and family, and all who carry in your hearts the sacred memory of those we honor today.

Ten years ago this coming Sunday, our firm lost 176 friends. Over 2,800 of our citizens lost their lives that day, including nearly 400 New York firefighters, police officers, and Port Authority officers who risked their lives to save people they did not even know. But that was their job; to do their best.

For those of us here today, for our 60,000 Aon colleagues around the world, and for our nation, Sunday will be a day to remember, to reflect, and to renew.

Each of us is pained to the core by the tragedy of September 11. We know that we share this pain not only with everyone here, but with everyone in our firm and with all of the people of our great nation. What happened on that day nearly 10 years ago is a national loss that will never be forgotten.

It is perfectly natural to think back to the terrible images we saw. However, our presence here today, and the traditions that have been created and carried on, serves to remind us of the fullness of the lives we honor and celebrate.

Our lost colleagues were just like the rest of us. Not only were they our friends, they were mothers and fathers, sons and daughters, brothers and sisters. They were raising families. They were pursuing their dreams. For many, they had their whole life ahead of them.

They were men and women made up of all races and faiths. We all know they were taken from us much too soon. But as we nod our heads in agreement on that fact, let us also agree that they lived well and that their spirit lives on in all of us.

To those of you from Aon who were there that day, I want you to know how proud we are as a firm of your dedication and the manner in which you have honored those who have struggled and those who have fallen. While no one can grasp the depth of your sorrow, know that we are willing to share it.

For the families of our lost colleagues, we know that many of you have shed more tears than we will ever know. And while it might seem that the world has slowly moved on to other issues and concerns, I want to assure you that the spirit of your loved ones will always live on in the heart of Aon.

And so how do we honor them on this day? Well, my friends, I think they have in fact honored us with their legacy. We recall the actions they took, which inspired us and why we remember them so fondly.  For some, it is the legacy of their children.

For example, it is someone like Kerene Reeves, the daughter of Carol Rabalais. Kerene completed her undergraduate work at the New York City Technical College. She joined Aon in October of 2001 and today is an associate broker for Aon Risk Solutions.

It is someone like Maureen Doherty, the daughter of John Doherty. Maureen graduated from the College of the Holy Cross in 2010 and has begun pursuing a master’s degree in speech pathology at Boston University.

And it is someone like David Hemschoot, the son of Mark Hemschoot. David graduated magna cum laude from Fairleigh Dickinson University in 2007. In a letter to Aon, David wrote, “Relieving my mother of the financial burden and seeing the scholarships as a tribute to my father has made me work very hard to do my best.”

“To do my best.” Those four simple words truly capture the spirit of emerging from hardship.

“To do my best.” It is how the first responders did their jobs on that day. It is how all of us can live our lives each and every day.

It will be 10 years ago this Sunday that we saw destruction and tragedy. Yet, when we look at the world today through the eyes of Kerene, Maureen and David, and the children of our lost colleagues who have moved forward with their lives in such a positive manner, we see comfort and hope. In their actions we see the future of our great nation, and for that we bow our heads and give thanks.

This is how we – their families, their friends, their fellow workers – will continue to remember our 176 friends and colleagues. This is how we will help keep their legacy alive.

In the words of the prophet Isaiah, “Lift your eyes and look to the heavens. Who created all these? He who brings out the starry hosts one by one and calls them each by name. Because of his great power, and mighty strength, not one of them is missing.”

The same Creator who names the stars also knows the names of the Aon friends and colleagues we mourn and remember today. We lost them all on September 11, yet we know that they will never be forgotten. And that their legacy, born in tragedy, can be one of hope, commitment and enduring faith.

Source : Aon Corporation

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Tropical Storm Nate has moved only a little from its position over the Bay of Campeche in the Gulf of Mexico.  The system has in the mean time strengthened to a strong tropical storm.

The National Hurricane Center (NHC) has the system remaining over the Bay of Campeche for the next few days, with a general northwest trend during this time towards the Mexican coast.  It is then forecast to make landfall late Sunday/ early Monday. Nate is further south than was forecast yesterday, increasing the certainty in the track towards Mexico and diminishing the likelihood of the system tracking northward. Model guidance, as of 06:00 UTC on Friday, September 9, has changed significantly from that of 24 hours previously – tracking Nate towards the central Mexican coast, with only two models taking the system north.

The NHC forecasts the strengthening of the system, and suggests Nate could become a hurricane later today.  If it does so, it will become the third hurricane of the 2011 Atlantic Season. The NHC intensity forecast is to the upper end of model guidance – a strong Category 1 hurricane. Model guidance does not forecast the strengthening to a major hurricane, most likely due to the proximity of the system to land and the presence of dry air to the northwest.

Tropical Storm warnings have been issued for the Mexico coastal regions of the southeastern Bay of Campeche. Nate is causing heavy rains and high winds to coastal regions of the Mexican states of Campeche, Tabasco, and southern Veracruz.

Tropical Storm Maria

Tropical Storm Maria continues to track quickly towards the Lesser Antilles with no change in intensity. Tropical Storm warnings have been issued for Guadeloupe, St. Maarten, Saba, and St. Eustatius.

Under the current forecast from the NHC, the system will track over the Leeward Islands as a tropical storm before passing over the eastern Greater Antilles at tropical storm strength.  It will then turn to the northwest to track to the east of the islands in the Lucayan Archipelago. It is too early at this time to determine if the storm will be a threat to the U.S.

Source : RMS

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Britain’s proposed overhaul of the state-run National Health Service on Wednesday cleared its first hurdle after lawmakers in the lower House of Commons voted in favour of the controversial bill. 

MPs voted for the reforms by 316 to 251, but the bill now faces a difficult passage through parliament’s upper House of Lords.

The bill has split the ruling Conservative-Liberal Democrat coalition and has drawn criticism from the medical profession.

Critics fear the wideranging changes could be a step towards the privatisation o the NHS.

Supporters claim the reforms will afford patients better protection and raise standards by offering a wider choice of health care providers.  Conservative Prime Minister David Cameron, who was forced by critics to postpone the bill’s passage through parliament in April in order to make amendments, said the shake-up would strengthen the service.

“The point of our health reforms is to put doctors in charge, give patients greater choice and heal the divide between health and social care,” he said at Wednesday’s Prime Minister’s Questions.

“I believe that they will lead to a stronger NHS and better outcomes for patients,” he added.

Four members of the junior coalition partners, the Liberal Democrats, voted against the reforms and a further 11 did not vote.

The most controversial point of the plan would see responsibility for commissioning services removed from local boards and handed to healthcare professionals, potentially widening the role of private providers.

Health Minister Andrew Lansley promised that safeguards would be implemented to limit private involvement and said the reforms were essential to make sure the NHS “is fit to face the challenge of tomorrow”.  Shadow health secretary John Healey accused the bill of “giving health reform a bad name”.

“It’s unwanted and unnecessary,” he added.

“It’s reckless to force through the biggest reorganisation in NHS history at the same time that finances are tight and pressures on the health service are growing.”

London, Sept 7, 2011 (AFP)

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Earthquakes in Japan and New Zealand, storms in the United States and floods in Brazil have caused widespread death and disrupted the lives of millions, but they are also set to turn 2011 into the second worst on record for insurers, reinsurer Swiss Re said on Friday. 

The costs incurred by global insurers from natural and man-made disasters reached $70 billion during the first half of 2011, more than twice the figure of $29 billion in the first half of 2010, Swiss Re said.

“In terms of catastrophe claims, 2011 is already the second costliest year in history for the insurance industry,” SwissRe chief economist Thomas Hess said.

The company gave the details in a statement on the firm’s preliminary loss estimate for the first six months of 2011 which happens to coincide with the sixth-month anniversary of the Japanese disaster and comes on the eve of the rugby world cup competition in New Zealand.

Several matches have had to be switched away from quake-hit Christchurch.

The worst year so far for insurance firms was 2005, when Hurricane Katrina, Wilma and Rita caused more than $90 billion in combined loss, Swiss Re said.

Total insured loss in that year was $120 billion, including claims for hurricanes and other disasters, it said.

Swiss Re also said that the tsunami and earthquake in Japan, which killed more than 26,000 people and caused nuclear contamination, coupled with the February earthquake in Christchurch would cost insurers upwards of $40 billion, making 2011 already the second most expensive year for earthquakes.

This was despite the magnitude of the January 2010 earthquake in Haiti, which flattened the capital Port-au-Prince and killed more than 280,000 people during the same period a year ago, the company said.

The casualty figures were provided in the Swiss Re statement.

“Given the many people who died in Japan and the sad experiences in New Zealand, 2011 will certainly go down as another year of very tragic earthquakes,” Hess said.

He also warned that as the US hurricane season was still not over, and the winter storms in Europe had not yet begun, the rest of the year had “the potential to bring figures for the full year even closer to the record claims of $12 billion experience in 2005.”

Swiss Re said that total losses for both the insured and uninsured during the first six months of 2011 totalled $278 billion, with 26,000 victims, mostly in Japan following the March tsunami and earthquake.

During the same period in 2010, however, total losses reached $166 billion.

The March 11 Tohoku earthquake ranks as the most expensive natural catastrophe for insurers this year, generating $30 billion in claims, while total losses are evaluated at 210 billion, it said.  The February 22 earthquake in Christchurch ranked second, with $9.0-12.0 billion in claims, followed by the April storms and tornadoes in Alabama and surrounding states, with insured loss estimated at $6.6 billion, it said.

Floods in Brazil in January took more than 900 lives.  The floods in Australia in December 2010 to January 2011 caused insured losses of more than $2.8 billion, it said.

Man-made disasters caused more than $3.0 billion in insured losses, it added, without giving any details.

Zurich, Sept 9, 2011 (AFP)

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Several US lawmakers and New York rescuers who rushed to the Twin Towers on September 11, 2001 called on the government Wednesday to include cancer as a disease that qualifies for assistance relating to the deadly terrorist attacks.   

At issue is the Zadroga Act, more than $4 billion they allocated to pay for medical treatment for rescuers. The bill covers doctors’ visits for asthma, post-traumatic stress, anxiety, back pain and carpal tunnel syndrome.

Congress approved the measure in 2010, and President Barack Obama signed it into law in January.

However in July a government review determined that there was “insufficient evidence” to add cancer to the list of health conditions covered.

Those who want cancer covered signed a petition urging “an immediate review of new medical evidence showing increased cancer rates among firefighters who served at Ground Zero.”    They point to a recent study in the journal Lancet showing that New York City firefighters who rushed to the doomed twin towers were 19 percent more likely to have cancer than their non-exposed colleagues.

“On September 11, we rescued you. Now it’s your turn to rescue us,” said Pat Lynch, head of the Patrolmen’s Benevolent Association, speaking at a press conference at the site where New York’s Twin Towers once stood.

“We worked with our hands and knees in a toxic cloud,” he said. Now, there are city police officers “who are sick and dying,” he said.

“The evidence is now compelling,” said Congressman Jerrold Nadler, one of the Zadroga Act authors.

“Many of us have known for years that exposure to Ground Zero contaminant has led — and will continue to lead — to increases in cancer among 9/11 responders and survivors,” Nadler said.

New York congresswoman Carolyn Maloney said that it took decades to prove the link between cancer and cigarette smoking. “We have a very urgent need to act quickly now for these people who are suffering,” she said.

The Zadroga Act is named after a fallen New York City police officer who died at age 34 of cancer.

According to the Fealgood Foundation, an advocacy group for first responders run by John Feal, a construction worker who was injured at the site, 1,020 of the estimated 40,000 WTC workers and volunteers have died from health complications.

A total of 345 members of the fire department and 45 police officers have since died from cancer, surpassing the death toll on the day itself when 343 firefighters and 23 police lost their lives, Feal said.

New York, Sept 7, 2011 (AFP) 

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A new report by Swiss Re has predicted that the market for insurance-linked securities (ILS) is set for growth.

The report, entitled ‘The Fundamentals of insurance Linked Securities’ stated that the ‘market for insurance-linked securities is poised for continued growth as re/insurers, governments and corporations continue to access capital market solutions to finance growth, manage their capital and transfer risks related to natural catastrophes and other extreme events.

The Swiss Re study added that ILSs are a growing asset class attracting interest from firms looking to move peak risk and also from regular institutional investors who want to take a punt on the insurance industry.

Swiss Re itself claims to be a ‘pioneer’ of the sector and adds that its new report offers ‘a comprehensive overview of the structures and features of this growing asset class, together with a summary of the benefits of ILS from the perspectives of both the sponsor and the investor.’

The positive outlook is shared by the global reinsurance giant’s Head of Non-Life Risk Transformation, Martin Misping. He explained to the press that new interest in the sector in consistent and that it benefits from a strong set of stable, long-term partners.

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Smaller insurance firms are set to take the brunt of upheavals in the face of the Solvency II reforms, it has been suggested.

A survey conducted by Interim Partners revealed that the vast majority of those questioned believe smaller companies will be the most heavily impacted by the new capital risk management rules. In fact, 90 per cent of the 170 British insurance executives questioned said they believe these companies would stop providing personal line insurance policies entirely, due to poor profit margins.

The Interim report does not stand alone and a number of other analysts have warned that the implementation of Solvency II, which is set for 2013, will impose a high new regulatory standard for the insurance sector that could damage competition within the industry.

The regulations were initially conceived after the financial crisis in order to deal with what were perceived to be systemic weaknesses in the insurance sector. Whereas the market has been somewhat divided in the past, the legislation aims to unify the European Union insurance market into a single entity by harmonising insurance regulation across the region.

A single EU Passport licence for insurers to operate in member states if they fulfilled conditions, was introduced but many states concluded that the minimum requirements were insufficient and took up their own reforms, resulting in differing regulations.

Another key target of the Solvency II Directive will be to require companies to set aside substantially larger amounts of capital against their liabilities.

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Hiscox has been affirmed an insurer financial strength rating at ‘A’ by the credit rating agency Fitch Ratings and a long-term insurer default rating of all Hiscox holding companies affirmed at ‘BBB+’. The outlooks on all the ratings are stable.

The rating affirmations reflect the resilience of Hiscox’s risk-adjusted capital position to significant natural catastrophic losses in H111. Based on Fitch’s internal assessment, Hiscox’s capitalisation remains supportive of the rating level. This is despite the reporting of an interim operating loss in 2011 and the insurer’s continued commitment to a progressive dividend policy. Fitch views the key short-term risk for Hiscox’s capital position as being the industry’s common risk of higher catastrophic activity in H211.

The agency continues to recognise Hiscox’s sound track record of profitability as a favourable rating factor. The stability of the insurer’s performance has been aided by a reasonable balance in its sources of income and diversification by business unit. While an unprecedented level of catastrophic claims led Hiscox to report a H111 combined ratio of 116.9%, (H110: 93.6%), this was in line with many peers. Subsequently, Fitch anticipates that Hiscox will report a weaker operating result for full-year 2011.

Hiscox anticipates that it will benefit from counter-cycle management efforts, which included tighter underwriting in the reinsurance segments and were reflected in a moderate reduction of premiums written. Fitch believes these efforts will have a limited near-term effect and the insurer’s full-year profit will be significantly dependent on investment income and prior-year reserve releases.

The insurer’s developing profile remains an offsetting factor. The agency believes that the US and European businesses have yet to reach the operational scale required to achieve a stable level of profitability, although to some extent the European unit has supported the interim technical result in 2011. Fitch also notes relatively high competition in these markets as a challenge for Hiscox, but views the insurer’s cautious approach to developing new markets and territories as a mitigating factor.

Fitch views a rating upgrade as unlikely in the near term given the expected weakening in the insurer’s underwriting performance in 2011 and low interest rate environment. In a longer-term perspective, the ratings could be upgraded if Hiscox demonstrates the ability to deliver earnings and profitability that continue to outperform key peers. Fitch would consider the earnings contribution of each of the insurer’s operating segments when making this assessment.

Conversely, a downgrade may be triggered by a considerable erosion of capital to a level not commensurate with the current rating. According to Fitch’s internal assessment, this will need to be equivalent to the loss of 20%-25% of shareholders’ funds. A marked deterioration in profitability compared with peers could also result in downward rating pressure.

Hiscox is a specialist non-life insurance underwriting group focusing on a particular range of personal and commercial risks. Hiscox Syndicates Limited is the managing agent of Syndicates 33, 3624 and 6104. Hiscox Insurance Company Limited operates in the UK and Europe outside the Lloyd’s market, covering a wide range of specialist insurance for professionals and business customers. The group’s other insurance vehicles include Hiscox Insurance Company (Bermuda) Limited and Hiscox Insurance Company (Guernsey) Limited. Hiscox Ltd is the ultimate Bermudian-based holding company of Hiscox.

Source : Fitch Ratings

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Central Bank of Chile said at its August 18 monetary policy meeting that it considers it too early to cut interest rates, and this despite growing concerns about global economic growth and Europe’s debt crisis.

At the Aug. 18 meeting, the central bank took its second consecutive pause in raising rates, holding the benchmark overnight rate, known locally as the TPM, at 5.25%, and eliminated its rate-tightening bias.

One central bank governor, according to the minutes, said it “was too early to think about lowering the TPM,” while another governor pointed out that “the TPM was in its comfort zone.”

A future interest rate cut isn’t far-fetched, however, as elsewhere in the region, Brazil’s central bank unexpectedly cut its benchmark interest rate this week, after five consecutive increases earlier this year.

The Chilean central bank’s governors unanimously voted to maintain interest rates steady and agreed that a global slowdown “would have an impact on Chile’s economy,” according to the minutes. Some governors argued that “emerging market economies might see their growth significantly hampered, which would further decay global growth.”

In Chile, recent data continued to highlight strong economic activity and a substantial reduction in private inflation expectations, but the uncertain external situation would probably lead to more moderate growth and further declining inflation, the minutes said.

For 2011, the central bank expects inflation to end the year at 4.0%, but this outlook will likely be downwardly revised on September 7 when it releases its quarterly Monetary Policy Report.

Most analysts foresee the Chilean central bank maintaining rates pat at 5.25% for the short-term and keeping its bias neutral, although they say a rate cut can’t be ruled out if the global economy’s health worsens quickly.

“The central bank established a clearly neutral bias going forward and is likely happy to remain on hold for the time being…altogether, we expect the central bank to take its time to fully assess global developments and not to rush into a cut, or to hike further, but to act flexibly,” said Goldman Sachs economist Alberto Ramos.

Santiago, September 2, 2011, (Dow Jones)

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Typhoon Talas formed on August 25 as the Japan Meteorological Agency’s (JMA) 12th named storm of the 2011 Northwest Pacific typhoon season. The typhoon is located south of Osaka, Japan, moving 12 km/h in a north-northwest direction. Talas is a large storm, with tropical storm force winds extending up to 650 km from its center. Maximum 10-min sustained wind speeds are 120 km/h (with gusts up to 175 km/h), making it a weak Category 1 hurricane on the Saffir-Simpson scale.

 “The storm is expected to maintain its present slow north-northwest movement toward the south coast of Japan,” said Dr. Peter Sousounis, principal scientist at AIR Worldwide. “Little change in intensity is currently forecast prior to landfall, which is expected to occur late Friday or early Saturday, local time. Talas is currently forecast to make landfall on Shikoku Island and then cross into Honshu Island during the day on Saturday. Because of the storm’s large size, the duration of damaging winds will likely be more than 24 hours in many coastal locations.”

 “Talas is then expected to exit into Sea of Japan, where it will pick up speed as it interacts with an eastward moving trough and recurve towards the northeast as it crests the subtropical ridge, currently located east of Japan. A second landfall is possible on Sunday anywhere from the Primorsky Krai region of far eastern Russia to west coast of Hokkaido Island.”

As Talas approaches landfall, Japan’s mountainous coast will enhance precipitation on the north and east sides of the storm, creating flood and landslide hazards. This occurs because as the counterclockwise flow of air comes onshore, it is forced over the mountainous terrain, cooling in its ascent and forming clouds and precipitation. According to current measurements from Tropical Rainfall Measuring Mission satellites, total accumulated precipitation of 200–300 mm is likely in coastal locations, while higher amounts are expected in the mountains.

Dr. Sousounis continued, “Talas’s outer rainbands are already beginning to impact coastal Shikoku and Kinki regions with precipitation rates of less than 10 mm/hr along the coast to as high as 25 mm/hr at higher elevations. Associated with these rain bands are coastal 10-minute sustained winds of up to 40 km/hr. Currently, over a dozen prefectures near the landfall location and along the east side of the forecast track have been placed on alert for ground-loosening precipitation.”

Following devastating inland flood damage from Typhoon Kathleen in 1947 and coastal storm surge damage from Typhoon Vera in 1959, the government of Japan embarked on a massive effort to protect the country against future flood losses. Today, large-scale flood control structures (LFCS) in Japan include dams, embankments, underground cisterns and super levees. Thus, flood risk in Japan depends on both the accumulated runoff (which is a function of precipitation level, topography, and soil conditions) and flood defenses, which vary by region.

According to AIR, Japan has strict and well-enforced construction codes, and modern structures are expected to withstand Talas’ forecast wind speeds with minimal structural damage. More than 50% of residential structures and 95% of commercial and industrial structures are insured for wind damage in Japan. The primary concern from Typhoon Talas is flood damage, which is not automatically included in wind policies. In typical flood policies in Japan, a specified payout is made only when the actual damage falls within a specified range.

Much like for wind, the vulnerability of buildings to flood damage varies by construction type. For a given flood depth, a residential wood-frame building is expected to sustain more damage than a residential masonry building. Concrete construction is less vulnerable to flood than steel (which may experience surface corrosion and rust-induced expansion) or masonry structures (whose weak connections between building elements makes it permeable to water). Concrete buildings have a strong frame structure, but may suffer from cracking and rebar expansion. Commercial and apartment buildings usually have stronger foundations than residential buildings, and are thus better able to resist flood loads.

Furthermore, flood vulnerability varies by building height. Because damage is usually limited to the lower stories of a building, high-rise buildings will experience a lower damage ratio—the ratio of the repair cost and the total replacement value of the building—than low-rise buildings because a smaller proportion of the building is affected.

Source : AIR Worldwide 

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Firefighters exposed to the World Trade Center attacks are more likely to get cancer, while 9/11 rescue workers still suffer high illness rates generally, according to studies published Friday.   

In a 10th anniversary edition of medical journal The Lancet, scientists said however that death rates among emergency staff and civilians who survived the disaster were lower than those of the wider New York City population.

“The events of that day changed the historical trajectory of America and the world. They have had — and continue to have — profound consequences for health,” the Lancet journal said in an editorial.

One study showed that New York City firefighters who rushed to the doomed Twin Towers a decade ago are 19 percent more likely to have cancer than their non-exposed colleagues and a comparable section of the city’s population.

There were 263 cancer cases in the exposed firefighters compared with 238 expected from general population data, while from the non-exposed group there were only 135 compared with 161 expected from the general population.

The study, led by David Prezant, chief medical officer of the Fire Department of the City of New York (FDNY), and colleagues, looked at 9,853 male firefighters with health records dating back to well before 9/11.    Another study in the Lancet showed a high burden of both physical and mental illness in the estimated 50,000 rescue and recovery workers involved in the September 11, 2001 attacks on New York by Al-Qaeda.

Data gathered from more than 27,000 of those workers, who enrolled in a federally funded monitoring programme, showed that 28 per cent had developed asthma, 42 percent sinusitis, and 39 per cent gastrooesophageal reflux disease.

Twenty-eight per cent had depression, 32 per cent had post-traumatic stress disorder and 21 per cent had panic disorder, said the study by Juan Wisnivesky, of the Mount Sinai School of Medicine in New York state.

“Our findings show a substantial burden of persistent physical and mental disorders in rescue and recovery workers who rushed to the site of the WTC and laboured there for weeks and months 10 years ago,” the study said.    But World Trade Center-exposed rescue workers and civilians have had lower death rates than New York City general population, a third study by researchers at the New York City Department of Health and Mental Hygiene.

They said the fact that most of those exposed were employed and that they had volunteered for the study — both employed people and study volunteers are largely healthier than the overall population — could account for the result.

London, Sept 2, 2011 (AFP)

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Katia has just strengthened to hurricane status, becoming the second hurricane of the 2011 Atlantic season.

The system is forecast, by the National Hurricane Centre (NHC), to track to the west over the tropical Atlantic and to be to the northeast of the Lesser Antilles towards the end of the coming weekend. It is too early at this time to determine the forecast track beyond this period and to determine if the storm will be a threat to the Caribbean, Bermuda, or the U.S.

The NHC is forecasting the system to remain at hurricane status over the next few days after which it is to strengthen to a major hurricane. Interaction with dry air to the north and east of the storm, and the development of southwesterly shear from an upper level trough in Katia’s path over the next few days, are muting the rate of Katia’s intensification. Currently, model guidance is in agreement as to a slow intensification towards major hurricane status in the next few days. Intensity guidance has reduced the strength of Katia from previous model runs, as a consequence of the wind shear.

Source : RMS

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Brit Insurance warns that if truck drivers do not comply with forthcoming European regulation there could be a major breakdown in distribution and supply chains.

A new EU-wide regime of driver certification of professional competence (Driver CPC) will affect hundreds of thousands of employed and self-employed truck drivers across all 27 European Member States with implications for all companies and organisations in the UK.

Andy Keane, UK Motor Portfolio Manager at leading business insurer Brit Insurance says that the ramifications for both the haulage industry and the UK economy will be far reaching unless operators take action now and current levels of Driver CPC uptake improves.

“The deadline for completing the required 35 hours of training is 2014 which may seem like a long way off but the reality is many haulage companies and drivers are simply leaving it too late.”

On current industry estimates, there’s likely to be a rush for training towards the end of the compliance period and this will have major implications for business continuity.

“The current shortfall in the number of training hours completed by those required to undertake Driver CPC is likely to exceed 5 million training hours by the end of 2011 and it’s predicted there could be as much as a 30 percent shortfall in the number of qualified drivers of vehicles over 3.5 tonnes before 2014.

“Should this happen, the impact on the UK economy could be devastating with a downturn in productivity coupled with loss of sales for many millions of businesses that depend on road haulage,” warns Keane.

Operators are still reeling from the escalation in diesel and petrol costs but the underlying implications for the haulage industry through non-compliance with Driver CPC is potentially far more serious.

According to John Davidge, Technical Consultant with Cardinus Risk Management, many operators have either stuck their heads in the sand or are simply unaware of the implications that this EU directive has for the future of their businesses.

“There will be many small-medium businesses that will be caught out by these forthcoming regulations. A couple of weeks’ ago I did a survey with a lighting firm in Essex that run a mixed fleet of vans, 7.5 tonnes trucks and cars and was shocked to learn that the finance director was totally unaware of the Driver CPC regulations despite the risk that failure to comply will have on the business.

“Many SMBs use a warehouseman or factory worker as a spare driver to cover leave or times where there’s high demand and unless they’ve received the requisite Driver CPC training, those drivers will no longer be able to drive,” he says.

Haulage and fleet owners must now rethink how they manage their businesses in the future and the issue is further complicated as the number of qualified drivers available (average age 54 years) is rapidly falling, according to the Office for National Statistics (ONS) in the UK.

Latest research shows that there are 299,000 vocational large goods vehicle drivers in employment, a drop of nearly 3.5 per cent over the last couple of years (309,000, 2009).

Source : Brit Insurance

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Most of us, when organising a holiday, seek to keep costs to a minimum. Even if cash isn’t an issue, travellers like to pay for only those things that will provide enjoyment or comfort: whether that’s an extra payment of £60 for an upgrade to first class whilst travelling, or £30 for a fun pre-planned activity with the kids. So, when it comes to travel insurance, you are probably wondering if it is simply an unnecessary luxury you could do without.

Travel insurance provides financial protection in the event of anything going wrong with your holiday. It could ensure the funds for important medical treatment, or provide you with a refund if you have to cancel your holiday for unexpected reasons. It could potentially prevent costs from mounting up to thousands of pounds. This in itself is why each and every one of us, when embarking upon a holiday abroad, need to take out a travel insurance policy.

Medical matters

From serious injuries, accidents and emergencies to cover for minor illnesses requiring medical attention; good cover is the key to getting the worry-free holiday you crave. If you become ill or get hurt without insurance, you will be in a lot of trouble; potentially, you could end up with debts that could wipe out your savings. Purchasing a travel insurance policy will eliminate this risk. Even if you don’t need to use your insurance policy whilst on holiday (which is the case in most circumstances, thankfully), the payment gives you complete peace of mind. It should also be remembered that medical institutions abroad do not operate like those in the UK. Hospitals and clinics may refuse treatment if you don’t pay up in advance when uninsured.

Airport troubles

Anyone who has travelled by aeroplane before will know of all the potential things that can go wrong. From missed flights and lost luggage, to long delays and last-minute cancellations, it’s evident that due to the likelihood of such an event occurring, taking out travel insurance could definitely pay off. Travel insurance can help if you miss your flight through no fault of your own. It is also beneficial if your luggage is lost, or indeed if the delivery of your luggage is delayed, with appropriate reimbursement for your loss. If your flight is delayed, you can claim compensation for lost holiday time.

Destination disaster

Travel insurance could help with issues regarding civil unrest and terrorism. Whatever the reasons for your visit, circumstances may arise in which it would be best for you and your family to be evacuated from the country. Emergency transport in this case will be arranged. Any costs associated with this will be covered with travel insurance. Even if the region you are travelling to is secure, life-threatening weather conditions may arise during certain times of the year. Any financial inconvenience because of this will also be dealt with by your insurance company.

What if I’m holidaying in the UK?

Those holidaying in the UK may want to think twice about taking out travel insurance. As you are on home turf, it may not seem necessary if you are already insured with your mode of transport (for example, if you have car insurance). That said, if you have booked accommodation which could be affected by travel issues, you may wish to look for an appropriate insurance policy. In addition, those participating in sports and activity holidays will need to look for insurance cover.

Prevent black clouds from ruining your holiday. Organise travel insurance the easy way before travelling; use a price comparison website.

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