Hub: Reg. Insurers Risk Higher Insolvency

|

By Michael Ha

|

NU Online News Service, Dec. 15, 11:55 a.m.EST?Despite improving underwriting results for the overallproperty-casualty industry, the marketplace should still expect awave of reserve surprises and insolvencies?especially for smallerregional carriers?in the coming year, a major brokerage firmforecast.[@@]

|

"We expect further downgrades and another wave of insolvencies.Insureds must carefully evaluate their insurance carrier," saidDamian Testa, president for Kaye Insurance Associates, part ofChicago-based Hub International Limited.

|

Mr. Testa told National Underwriter that regionalcarriers could face a higher risk of insolvencies in 2004. "Itcould now be regional carriers that have to add to their reserves.The other issue is reinsurance receivables; if reinsurers don't payit, smaller carriers are more at risk," Mr. Testa said.

|

He observed that there are now more problems arising betweencarriers and reinsurers, with reinsurers not paying claims asrapidly as they used to. "So that could be a real problem forsmaller guys next year," he forecast.

|

Another concern for the p-c industry in 2004 is the soaring juryawards, Mr. Testa said. (A recent study by New York-basedconsultants Tillinghast-Towers Perrin found that tort-related costsin the civil litigation system reached $233 billion in 2002, theirlargest dollar increase in U.S. history. See NU Online NewsService, Dec. 10, 2003.)

|

"Jury awards certainly seem to be outpacing inflation?when youget one jury award, that could also lead to hundreds of otherhigh-cost settlements. Plaintiffs' lawyers are doing a very goodjob in increasing awards and settlements," he noted.

Want to continue reading?
Become a Free PropertyCasualty360 Digital Reader

  • All PropertyCasualty360.com news coverage, best practices, and in-depth analysis.
  • Educational webcasts, resources from industry leaders, and informative newsletters.
  • Other award-winning websites including BenefitsPRO.com and ThinkAdvisor.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.