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Sofia Ashmore

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Suncorp, IAG and QBE gave a lesson in remaining cool in a crisis, reassuring the public and the markets that they could pay out on claims.

Analysts initially agreed that the safety net of the companies’ own re-insurance policies would nullify any damaging exposure.

But as the total bill is estimated at $1 billion and some insurers have made disclosures about revised liabilities in their own re-insurance, analysts are expressing doubts about their ability to deliver previously forecast earnings.

Yesterday, the Insurance Council of Australia updated the number of insurance claims so far to 7000 for a total of $365 million, excluding claims from large industrial and mining policyholders.

The figures also exclude claims from the hardest-hit areas — Toowoomba, Ipswich and Brisbane — and likely claims from parts of NSW and Victoria that have experienced heavy flooding.

Even though analysts may have revised their earnings estimates for some insurers, the sector faces strong headwinds in 2011.

Insurers are also on a knife edge over planned regulations requiring them to boost their capital reserves.

WHAT ANALYSTS SAY

JP Morgan analyst Siddharth Parameswaran told The Daily Telegraph that, based on statements issued by Suncorp, he had revised its full-year net profit down by 25 per cent to $240 million.

IAG also earned a 5 per cent downgrade to $35 million for 2010-11, but Mr Parameswaran said he had not revised QBE’s expected earnings as it had

not posted any material announcements about its exposure to the floods.

Fitch Ratings is sticking to its assessment of the sector’s ability to protect itself from debilitating losses.

Primary analyst John Birch said yesterday details coming to hand confirmed Fitch’s view that re-insurance, plus individual insurers’ own provisions, would adequately protect the big three.

Suncorp’s main catastrophe re-insurance provides $5.6 billion of cover in excess of $200 million per event, should the inundation of Ipswich and Brisbane be extremely severe.

Based on a July 1 start date, this policy lessens the annual impact on earnings from frequent large-loss events.

IAG’s re-insurance is based on a January 1 start date, and some of the damage from the Queensland floods will be captured by its 2010 program.

Fitch expects the impact to the globally diversified QBE to be immaterial, given its low level of concentration in one area or class of insurance.

REGULATION

Last year, APRA signalled that it wanted to revise upwards capital standards for the $42 billion industry, which netted $7 billion in profit.

That plan met with industry condemnation, and it is understood APRA will now consult more thoroughly before releasing revised proposals.

COMPETITION

The insurance market is divided into two main tiers, with the big players accounting for more than half.

Market share is roughly Suncorp on 18.2 per cent; IAG on 16 per cent; QBE on 10 per cent; and Allianz on 7.6 per cent, with the remainder shared among more than 100 much smaller providers.

Competition will also come from new entrants such as Virgin Money, which already offers motor insurance in an alliance with Citibank and is considering offering life-insurance policies.

Japan’s Dai-ichi, which is finalising its purchase of Tower Australia, has also said it is continuing to eye expansion in south-east Asia, including Australia.

Australia Post, which is rumoured to be considering a push into financial services, is also well placed to offer insurance products.

Some of the smaller players in the market, however, will struggle to meet APRA’s new capital requirements and will be likely takeover targets.

ECONOMY

Adding to the uncertainties will be the economy, which dictates how much insurers collect from their investments.

Before the floods, market researcher IBIS-World had

estimated the sector would grow by 2.4 per cent between now and 2016.

But IBISWorld’s Ian McGowan said this estimate might need to be revised if further catastrophes occurred over the next year or two.

Source : The Daily  Telegraph

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American Insurance Group, the insurer whose collapse triggered pandemonium in financial markets across the world two years ago, is preparing to sever its ties with the US government’s purse strings.

AIG executives said today that they expected to finalise an agreement with government officials that could pave the way for the biggest stock offering in US history, worth tens of billions of dollars.

AIG will convert outstanding preferred shares acquired by the US Treasury into common stock, giving the taxpayer approximately 92% of AIG’s common shares when the transaction is complete. The government and AIG, which has an estimated market value of $96bn (£61bn), are interviewing Wall Street banks as they decide which one will land the lucrative job of selling off the insurer’s shares, a process that is being called a “re-IPO.” Among those pitching are other bailout recipients including JP Morgan and Morgan Stanley. The first share sale is planned for March and may top the $21.3bn raised by the selloff of another government bailout recipient, General Motors.

“With today’s announcement, we anticipate that we will be able to deliver on our promise to the American people to repay the extraordinary assistance they provided to AIG during the financial crisis of 2008,” Robert Benmosche, AIG president and chief executive, said in a statement.

In addition, AIG will repay the Federal Reserve Bank of New York $21bn to cover the loans the bank made during the financial crisis. AIG has sold assets to repay the loans, including its Taiwan unit, Nan Shan Life Insurance, which it sold for $2.16bn in cash on Wednesday.

The $182.3bn bailout of AIG in 2008 caused widespread anger. Staff received death threats after revelations that executives were being paid big bonuses and were attending conferences at luxury resorts. Benmosche has staunchly defended the insurer and its staff. He thanked the American people for their support. “We remain grateful for their support of AIG, and we remain convinced that the American people will realize a profit on their investment in our company,” he said.

Last October AIG announced that Benmosche had started treatment for cancer. The 66-year-old told employees last year that he expects his health will permit him to lead AIG until after the US treasury’s exit. The company is expected to give more details of Benmosche’s condition and any succession plans as it finalises the sale. AIG has said a long-term replacement will be chosen within the next two years.

Investors who have stuck by the company will be rewarded as part of the recapitalisation. Next week AIG plans to issue 75m warrants that will enable current shareholders to purchase common stock at price of $45. On Friday AIG was trading at $58.35.

Source : The Guardian

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Fitch Ratings has commented today that catastrophe reinsurance offers reasonable protection to Australia’s major non-life insurance companies against floods in Queensland and Northern New South Wales.

“Initially, insured losses appeared to have been relatively low given that the areas affected were less densely populated,” commented John Birch, Director at Fitch Ratings. “However, with the floods now inundating Ipswich and Brisbane cities, losses could escalate substantially,” added Mr Birch.

While events continue to unfold and it is too early to know what the final insured cost will be, Fitch notes the comprehensive catastrophe reinsurance protections that are in place to deal with these events.

As measured by premium volume, Suncorp Group Limited (Suncorp) has the largest exposure to the Queensland region, have originated AUD1.9bn of premiums from the state in the year to 30 June 2010. While it is uncertain whether the gross losses from the floods to-date will trigger a recovery on the group’s main catastrophe reinsurance program, they will count towards the group’s aggregate cover.

Suncorp’s main catastrophe reinsurance provides a significant AUD5.6bn of cover, in excess of AUD200m per event, should the inundation of Ipswich and Brisbane be extremely severe. In addition, as time restrictions governing what defines a single event will likely result in the floods being multiple events, each event in excess of AUD10m would count towards the group’s aggregate cover. This provides AUD400m of protection once the sum of these net losses exceeds AUD300m. Based on a 1 July start date, this reinsurance lessens the annual impact on earnings from an increased frequency of large loss events. Moreover, following larger natural peril losses in recent times, Fitch notes that premium rate increases have allowed Suncorp to fund an increase in its natural peril allowance up 15% to AUD460m in FY11 from AUD400m in FY10.

Insurance Australia Group (IAG) generates around AUD600m of premium from Queensland, but also has a significant reinsurance program should the crisis escalate or spread further into New South Wales. As IAG’s reinsurance arrangement runs on a calendar year basis, losses to date in excess of AUD15m and up to AUD50m may be covered by their 2010 aggregate policy due to an active year for large loss events in 2010 having already eroded IAG’s aggregate deductible.

Notably, Fitch would expect that further losses from the current catastrophe may be defined as separate events and captured under the 2011 program. During 2010, IAG’s main catastrophe program provided AUD4.1bn of cover in excess of AUD200m, although additional reinsurance reduced the net retention to AUD135m for a first event and lower for a second and third. Renewing 1 January 2011 IAG has not yet announced the extent to which their 2010 program has been maintained in 2011 and while Fitch believes the group would have sought to obtain similar cover, following the Christchurch earthquake losses additional lower cover below the AUD200m layer may have been expensive to renew.

The largest listed insurer in Australia, QBE Insurance Group (QBE), manages aggregate exposure through geographic and product diversification in addition to various reinsurance programs. Premium originated through its Australian operations is around 25% of total premiums, although it also has Australian risk exposure through its Lloyds of London operations. While QBE has not disclosed its exposure to the Queensland floods, Fitch expects the impact to the group will be immaterial given the group’s historically strong aggregate management and low level of concentration in any one particular line or geography. Business units including the Australian operations purchase individual catastrophe cover, while a group-wide, three year aggregate cover provided additional protection for group earnings against an increased frequency of large losses. The latter provided up to AUD500m of cover over the three year period against an increased frequency of large losses (defined as net losses in excess of AUD2.5m), and ended on 31 December 2010.

Source : Reuters

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The British Insurance Brokers’ Association has launched its 2011 manifesto outlining its priority lobbying issues for the year ahead.

The manifesto highlights three key lobbying themes: Helping customers, regulation and consumer protection and driving change in the insurance industry.

Eric Galbraith, BIBA Chief Executive, said: “The big challenge for 2011 is to positively influence the coming regulatory changes that will affect insurance brokers, with development of the new Consumer Protection and Markets Authority (CPMA) and the revision of the Insurance Mediation Directive (IMD) in Europe. The manifesto will provide us with the opportunity to engage relevant stakeholders and ensure that we are at the heart of representing brokers.”

Graeme Trudgill, BIBA Head of Corporate Affairs, added: “The manifesto sets our lobbying agenda for the year ahead. It will also enable us to promote the benefits of brokers and raise important member issues with the government and the regulator. We are delighted by the feedback that we received from members whilst collating the manifesto and we are now looking forward to moving these issues forward.”

The 2011 manifesto will be distributed to all political stakeholders who are influential on the issues affecting insurance brokers.  It will be used to outline BIBA’s lobbying position to protect and promote BIBA’s members on the key issues affecting them.

The 2011 manifesto was formed following consultation with BIBA members and BIBA committees to ensure that BIBA is representing its members on the issues most important to them.

The manifesto can be downloaded here.

Source : BIBA Press Release

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The coalition government has certainly made its presence felt within the healthcare industry and with the longer-term shockwaves yet to be felt, Jelf Employee Benefits makes its predictions for 2011. These include the immense strain that the NHS will face, putting increased pressure on PMI providers and the amplified financial burden on employers who provide workplace health solutions. Additionally, Jelf Employee Benefits believes that consolidation of health insurance providers may mean less competition in the sector.

Wayne Pontin, Director, Jelf Employee Benefits said: “The overall status of the economy will have a huge impact on the healthcare sector in the UK. There are a lot of factors pointing towards an increase in PMI costs and employers are likely to be looking for ways to mitigate this expense. There is a stronger need than ever for employee benefits consultants this year to help employers take a long-term view and avoid any knee-jerk reaction.”

Jelf Employee Benefits summarises the main issues for 2011:

– Numerous NHS pressures: With 40 percent of adults set to be obese by 2025 and sickness absence already costing UK business nearly £14 billion a year, the Government will have to commence co-ordination on workplace health. Whilst there were no cuts in NHS budgets there are cost savings which all Primary Care Trusts will have to consider in order to keep within their budgets. Herein lies a dilemma because we foresee more high cost biological therapies being ‘pushed’ into the private sector which will ultimately increase PMI costs. In addition, the launch of the new GP charter will no doubt have many teething problems during 2011.

– Increased waiting lists: the pressures to keep within budgets and increased use of the NHS will see an increase in waiting lists – a potentially worrying step backwards for the NHS and patients alike.

– Employers feeling the strain: Increasing costs, increasing tax (IPT up to 6% in January) and National Insurance costs up, mean employers must invest where it makes sense – in health interventions that are known to be effective. Employers will require a greater understanding of the health profile of their workforce and will need professional advice to mitigate cost increases. Workplace health may see an increase in demand for employer funded Cash Plans.

– The good and the bad of insurers: On the one hand providers will start to develop a broader array of interventions that support employees to lead healthier lives but on the other, continued consolidation in the market leads to less competition in terms of both pricing and product development.  On a more positive note, there will be greater cooperation in terms of electronic data exchange but 2011 will not see full claims transparency.

Wayne concluded: “At this stage it us unclear which of the above factors will have the most impact during 2011 and it may be that the whole is greater than the sum of the parts. It’s going to be an exciting, if tough year, for all involved.”

Source : Jelf Press Release

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Australian medical officials braced Thursday for rampant disease in the country’s swamped northeast, with filthy floodwaters harbouring sewage, dead animals and dangerous debris.

Dozens of towns have been inundated including large areas of Brisbane, Australia’s third-largest city, in flooding across an area twice the size of Texas, or France and Germany combined.

More than 100,000 Brisbane homes were without power and fresh water supplies had been cut or compromised in some areas, while raw sewage spilled into waterways from submerged homes across the state of Queensland.

“We anticipate the number of patients with infections to swell as food, water and sanitation continue to be compromised,” the Australian Medical Association (AMA) warned.

“Infections may vary from ingestion varieties including gastroenteritis and parasitic infestations causing vomiting, diarrhoea, and abdominal pains to systemic infections.”

Mosquito-borne diseases were also expected to surge as the insects multiply in the stagnant waters, and any cut exposed to the murky wet should be treated with antiseptic and closely monitored, AMA Queensland president Gino Pecoraro said.

“People should avoid wading in even shallow water as it may be contaminated. If you must enter shallow floodwaters wear solid boots for protection,” Pecoraro said, urging people to seek medical advice and a tetanus shot for more serious injuries.

Food spoiled due to the widespread power cuts was another crucial health risk, and Pecoraro said it was also vital to acknowledge the psychological trauma brought by the disaster and seek help.

“This catastrophic event will impact our health system for many months and potentially years to come,” he said.

“We anticipate the mounting pressure on local hospitals will be overwhelming.”

Brisbane, Australia, Jan 13, 2011 (AFP)

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Ratings agency Moody’s has downgraded AIG by one notch, after the cash-strapped US insurance giant promised to undergo by Friday recapitalization measures to repay a government bailout.

The downgrade of AIG’s senior unsecured debt rating from A3 to Baa1 reflects “Moody’s view that while the core insurance operations have stabilized over the past year, they have not yet improved sufficiently to justify the previous ratings in the absence of continued government support,” the agency said late Wednesday.

“Moody’s also believes that the incremental risk associated with noncore businesses, while reduced, remains a negative credit consideration that will no longer be mitigated by government support.”

It also revised AIG’s rating outlook to “stable” from negative.

Hours earlier, AIG had indicated it was working to finalize a number of recapitalization milestones by Friday, though those plans remained uncertain.

After completing an exchange of 1.66 billion shares of AIG common stock for the 49.1 billion dollars of Troubled Asset Relief Program (TARP) preferred shares, AIG said the Treasury Department will own about 92 percent of the company’s outstanding shares, as well as a new series of preferred shares.

The progressive sale of these shares will allow the government to eventually leave its investment in AIG behind, but no date has been set yet.

For now, AIG simply indicated it was expecting the Federal Reserve Bank of New York to be “fully repaid” Friday, for nearly 50 billion dollars.

“With today’s announcement, we anticipate that we will be able to deliver on our promise to the American people to repay the extraordinary assistance they provided to AIG during the financial crisis of 2008,” AIG president and CEO Robert Benmosche said in a statement.

We remain grateful for their support of AIG, and we remain convinced that the American people will realize a profit on their investment in our company.”

New York, Jan 13, 2011 (AFP)

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Insurance Australia Group Limited (IAG) today provided an update on its claims experience arising from the extreme weather conditions which are affecting so many people across the State of Queensland.

IAG Managing Director and CEO, Mr Mike Wilkins, said the Group’s businesses, which distribute insurance predominantly under the NRMA Insurance and CGU brands in Queensland, have mobilized assessors and are focused on providing customers with the help they need during this particularly difficult time.

“Claims are being prioritised based on the severity of damage, and customers are encouraged to lodge their claims as quickly as possible,” Mr Wilkins said.

“Our priority is to assist both our customers and our people in Queensland.”

Mr Wilkins confirmed IAG had received approximately 1,200 claims arising from the heavy rain associated with Tropical Cyclone Tasha which commenced in late December 2010. While it remains too early to provide a definitive claim cost for this event as claims are still being assessed, IAG’s current expectation is that the net claim cost will be between $10 million – $30 million taking the total natural peril claim cost for the six months to 31 December 2010 to an estimated $120 million – $140 million.

IAG has also received approximately 2,400 claims from the more recent severe weather in South East Queensland which started in early January 2011. Given the ongoing nature of this event, it remains too early to determine the likely claim cost which will be included in the Group’s result for the second six months of this financial year.

Mr Wilkins said IAG’s renewed catastrophe reinsurance programme for the year commencing 1 January 2011 was structured similarly to that which operated in 2010. Under the programme the Group’s maximum event retention for a first event in calendar year 2011 is $150 million.

IAG will announce its half year results on 24 February 2011.

Source : IAG Press Release

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There is a trend within the yachting community for bigger vessels and purchases of luxury products, an expert claims.

National Boat Shows group marketing manager Michael Enser explained superyachts are leading the sector, while the mid-market saw sales affected by the downturn.

Individuals investing in a boat may also be looking for a UK insurance policy to cover it, particularly with Mr Enser pointing to a rise in high end spending.

According to recently published statistics from the British Marine Federation, total revenue generated by the leisure, superyacht and small commercial marine market in the UK during 2009-10 dipped by 6.2 per cent compared with the previous year to £2.963 billion.

However, the National Boat Shows expert forecasts a return to growth as “our audience are passionate boaters, it’s their hobby and people tend to invest in their hobby when times are tough because it is the thing that gives them comfort”.

Source : Giles Insurance Press Release

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Insurance regulator IRDA is in the early stages of drafting a regulation for covering nuclear accidents.  The move assumes significance as India is expected to be a major player in this sector after its nuclear deal with US is operationalised.

“We are in early stages (of the regulation). This thing involves large amount of risks. We will have to first constitute a pool which will be a member of the larger global pool (of nuclear accident insurance). That is yet to be figured out,” Irda Chairman J Hari Narayan said.

Speaking to reporters on the sidelines of the IBAI summit here, he also said that the reinsurer General Insurance Corporation (GIC) is working on the details to provide insurance protection to such accidents.
It is felt that the ambitious programme expected under the Indo-US nuclear deal may not materialise to the desired extent unless there is insurance protection for nuclear accidents.

According to US-India Business Council (USIBC) the Indo-US nuclear deal could open up investment opportunities to the tune of USD 500 billion over the next decade.  As of now, nuclear power accounts for just three per cent share of the total power produced in India from different sources. However, by 2020 this source is expected to provide 20,000 MW of power against little over 4,000 MW currently.

Source : The Economic Times

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A reduction in the price of motor insurance can only be achieved if the risks and costs borne by insurers are reduced, the Lloyd’s Market Association (LMA) told MPs yesterday.

David Powell, the LMA’s underwriting manager, appeared as a witness before the Transport Select Committee investigating the cost of personal motor insurance in England and Wales.
During his evidence to the committee, Mr Powell made four specific recommendations for Government action. He said: “Most importantly, we need to reduce the costs associated with personal injury claims. With this in mind, motor insurers advocate the rapid implementation of Lord Jackson and Lord Young’s recommendations, which include a clamp-down on referral fees and aggressive claims marketing.”
Other LMA recommendations made to the committee of MPs were:

– To bring in continuous insurance enforcement, quickly and fully funded

– To seriously consider how to reduce the risks presented by inexperienced drivers, including restricted licences

– To improve data sharing between government agencies and the insurance industry, and step up enforcement activity against low-level fraudsters

Commenting on the committee session, Mr Powell said: “My impression was that the MPs felt that some of the problems of the current system can be placed squarely at the door of the insurance industry. They accepted that claims numbers have gone up a lot, and that there is a compensation culture.”

The Transport Select Committee is investigating the rising cost of private motor insurance. The committee wants to understand the reasons behind the rate increases and assess their impact on young drivers in particular. MPs are also considering whether the cost of motor insurance has any impact on public policy.

Other witnesses giving evident alongside Mr Powell were former Association of British Insurers director general Mark Boleat, Chief Superintendent Geraint Anwyl and the Secure Vehicle Alliance.

A final report by the Transport Select Committee on the cost of motor insurance will be published later this year.

Source : LMA Press Release

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Allianz SE, Europe’s biggest insurer, said it bought $855 million of China Pacific Insurance (Group) Co. H shares from Carlyle Group.

Allianz now owns 240 million H shares in China Pacific, representing a 10.4 percent holding in that class, the Munich- based company said today in an e-mailed statement. The stake equates to a 2.8 percent position in CPIC’s total outstanding shares, Allianz said.

This acquisition follows an investment of $150 million by the German insurer in China Pacific’s H share initial public offering in December 2009, Allianz said.

Allianz Chief Executive Officer Michael Diekmann said the increased holding is part of his company’s “long-term investment” in China Pacific, China’s third-largest insurance company.

Carlyle sold 215.8 million China Pacific shares for HK$31.15 each, according to a term sheet obtained by Bloomberg News on Dec. 31. The H shares closed yesterday in Hong Kong at HK$33.45 each.

Source : Bloomberg

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Whittington Group, the international insurance investor and services provider, announces today that Charles Burgess, Managing Director of its Asia Pacific operations, has been appointed as a Director of the Group’s holding company, Whittington Group Pte Ltd.  Mr Burgess is based in Singapore, the Group’s Head Office.

Since joining the Group in May 2009 he has been leading the successful development of DirectAsia.com, the Group’s flagship direct insurance business in Asia, and has been working on the development of other non-life insurance opportunities across the region.

Tony Hobrow, Whittington Group Chief Executive, said: “Charlie will strengthen the executive team of our holding company  as we continue our expansion in Asia . Charlie has extensive experience of the insurance industry and with a background in corporate advisory work will be key to the strategic decisions the Group will be making in the coming months and years. I look forward to working closely with him as we seek new investment prospects and develop the DirectAsia.com business in new territories.”

Source : Whittington Press Release

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Berkshire Hathaway moved to expand its underwriting of the oil and gas industry Wednesday as part of a new agreement with Willis Group Holdings.

Willis, a global insurance broker, announced the move Wednesday. Under the terms, Berkshire will provide coverage up to $250 million on new policies.

Berkshire has provided insurance in this sector in the past through Willis, a spokeswoman for the broker said, but Wednesday’s announcement represents a new commitment from Warren Buffett’s legendary holding company.

“This additional capacity is excellent news. It provides substantial and easy access to AA+ rated paper to the market at a time when the need for additional capacity on a range of operating and construction risks has never been greater,” Alistair Rivers, CEO of Willis Global Energy, said in a statement.

A representative for Berkshire Hathaway could not immediately be reached for comment.

Insurance rates for deepwater drilling activities markedly increased in the wake of the Deepwater Horizon disaster that left BP on the hook for billions of dollars in damages.

In July, the House of Representatives passed legislation that would lift the current $75 million liability cap for oil spills while imposing new safety standards for offshore drilling.

But the bill stalled in the Senate, and it is unclear whether the new Congress will consider action on the issue.

Source : CNN Money

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Seven insurance companies have filed lawsuits against Toyota Motor Corp. seeking a minimum of USD 230,000 to cover the cost of claims paid for accidents related to the unintended acceleration problems identified in Toyota vehicles in the past several years.

The insurers filed separate but identical complaints Dec. 30 in Los Angeles County Superior Court, claiming that defects in Toyota vehicles were the cause of the crashes. “Certain of Toyota’s cars and trucks have a defect that causes sudden, uncontrolled acceleration to speeds of up to 100 miles per hour or more,” the complaints allege. “This defect is combined with the operator’s inability to stop the vehicle during such an incidence due to defective electronics and the absence of a fail-safe, such as a brake-override system.”

The lawsuits are similar to one filed by Allstate Corp. three months ago in the same court seeking $3 million in damages. The litigants are American Hardware Mutual Insurance Co., Fireman’s Fund Insurance Co., National Surety Corp., American Automobile Insurance Co., Ameriprise Insurance Co., Motorists Mutual Insurance Co. and IDS Property Casualty Insurance Co.

These types of claims “are common between insurers and auto makers. However, Toyota believes that any allegation that a vehicle-based defect is the cause of unintended acceleration in this or any other complaint is completely unfounded and has no basis,” said Celeste Migliore, a Toyota spokeswoman.

A message left with Edward Ordonez, one of the attorneys listed on the complaints, was not immediately returned.

In addition to the lawsuits from the insurance companies, Toyota faces more than a hundred complaints in federal court related to unintended acceleration. Most complaints contend that Toyota’s electronic throttle control system malfunctioned, causing cars to speed out of control.

Toyota has steadfastly denied problems with its electronics. It has admitted it had sticky throttles and floormats that could slip and entrap the pedal. These problems led to more than eight million recalls globally and a temporary halt to sales of eight Toyota models in the U.S. The company also began installing brake-override systems in all of its models and retroactively installing the system on some high-volume models during the recall. The system cuts power to the engine when both the brake and accelerator pedal are depressed.

The U.S. Department of Transportation has been investigating Toyota vehicles for more than six months and has enlisted the aid of the National Aeronautics and Space Administration to run tests of vehicles. So far, no evidence of electronic problems has surfaced, but a final report hasn’t been released.

Indeed, analysis of crashes that have occurred in the past year where unintended acceleration was blamed shows that drivers were accidentally hitting the accelerator pedal instead of the brake in most cases.

The Los Angeles Times first reported the lawsuits.

Source : The Wall Street Journal

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– More than 40% of insurers are still only in the preparatory stages or have yet to launch their Solvency II projects

– Project budgets are expected to increase sharply over the next two years

– Concerns remain over whether the amount of skilled people required to complete projects will be available

Nearly three quarters (74%) of insurers are confident they will meet the 2013 deadline for implementing Solvency II, despite more than 40% only being in the preparatory stages or yet to launch their projects.

According to a recent PwC survey of 115 insurers in 22 countries across Europe and outside the EEA, 11% have not yet launched their Solvency II project. Of those that have started the implementation process, the majority of respondents are only a quarter of the way through.

The survey also revealed many insurers are unsure about the amount of additional money and people they will need to complete the project. Respondents expect most of the remaining costs to come from IT spend and staff recruitment.

Overall budgets for implementing Solvency II vary, with the majority (40%) having a budget of less than €1m. Only 9% of those surveyed predict spending more than €20m on the whole Solvency II project. Of those who have already launched their Solvency II projects, 83% have spent less than 20% of their overall budget, indicating that the majority of the effort will come in the next two years.

Paul Clarke, global Solvency II leader at PwC, commented:

“The survey findings raise challenges about whether insurers are leaving enough time to tackle the more complex aspects of Solvency II. Some insurers could therefore find themselves with an excessively tough and disruptive late push for the line.

“Insurers are facing difficult questions over whether hiring the additional people needed with the required skills will be possible. Many could find themselves paying over the odds for people with the right skills if they don’t clarify their resource needs sooner rather than later.

“Solvency II budgets may have to rise considerably, as the majority of effort will need to come in the next two years as detailed rules in the level 2 implementing measures are issued.”

Source : PwC Press Release

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Insurance Premium Tax goes up in January, which will add a further 1 per cent to the generally upward trend in the cost of insurance.

Traditionally, the first quarter of the year tends to show little premium movement when it comes to motor insurance. Indeed, in 2010 they fell slightly, but very quickly resumed their upward climb. But I think we can expect to see premiums continue to go up in the first quarter of 2011. The premium increases of the past year have helped to correct reserves but the problems of fraud and claims inflation remain.

It really is important that the government finds ways to control the growing compensation culture in the UK, and I hope that before the end of the year some positive measures to do so will have been put in place.

Lord Justice Jackson’s recommendations on combating civil litigation costs and controlling “no-win, no-fee” ambulance chasing lawyers are welcome and should both curb those annoying text messages urging us to claim for accident injury we may or may not have suffered and limit the associated legal costs.

To read more please click here…

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Prudential Corporation Asia has announced leadership changes in its Singapore life insurance business, Prudential Assurance Company Singapore (Pte) Limited.

Chief executive officer Mr Philip Seah has been appointed to the regional role of Chief Agency Officer, Asia.

Mr Seah had led the business as CEO since 2006. In his new role, Mr Seah will lead the company’s efforts and recruitment and training in Prudential’s agency force across Asia, which currently numbers approximately 340,000.

Mr Seah joined Prudential in 1978 as an agent and quickly progressed through its agency ranks before joining the management team as chief agency officer of Prudential Assurance Singapore in 1990. He subsequently served as director of agency development at Prudential’s regional headquarters in Hong Kong before taking on leadership roles in Prudential’s Philippines and Singapore life insurance businesses.

Mr Kevin Holmgren in turn has been named CEO-designate of Prudential Assurance Singapore. His appointment is subject to confirmation by the Monetary Authority of Singapore (MAS).

Mr Holmgren’s career at Prudential spans more than a decade. Until early 2010, he led Prudential’s life insurance business in Indonesia, PT Prudential Life Assurance, as CEO.

Commenting on the appointment, Tony Wilkey, chief executive of insurance at Prudential Corporation Asia, said: “Under Kevin’s leadership, I have every confidence Prudential Assurance Singapore will continue to deliver exceptional products and services to our customers in Singapore. Singapore is one of Prudential’s largest markets in Asia, and the business remains well positioned to grow from strength to strength and to continue as a leader in Singapore’s life insurance market.”

Source : Asia One Business

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A Romanian insurance company launched a daring new TV ad to promote its new car insurance product.

Asirom (Asigurare Romaneasca) made it sexy, for a guaranteed buzz. With almost 10,000 views already, this ad has not yet finished being talked about. Something to warm up in this cold weather.

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