Be Vigilant On Insurers' Fiscal Health, Marsh Advises

NU Online News Service, April 16, 1:50 p.m. EDT

While the property and casualty insurance industry is seeing signs of returning fiscal health, policyholders should monitor the financial stability of insures in their portfolio, executives advised.

That piece of counsel came during a Webinar sponsored by insurance broker Marsh titled, "Insurance market security, ratings, and managing your insurer portfolio," held on Wednesday.

While noting the health of the overall p&c industry is improving, Melina Reed, senior vice president, Marsh's market information group noted that "Selecting an insurance company has become one of the more important decisions that a company can make."

She noted that clients need to "have all the information necessary to make an informed decision. It's also important to be conscious of the fact that the outlook for the industry as a whole and for individual insurers can change rather quickly."

She went on to say that, even after a client has bound coverage, the insured should continue to monitor the insurers on their program. Ms. Reed further advised insureds to follow up with their broker at mid-term and be alert to any reports on insurers while following announcements from rating agencies.

Carol Pierce, vice president with Munich Re, said, "Insurance buyers need to stay on top of this. It is ever changing and constantly in need of analysis. There are a lot of tools available. Each insurance buyer needs to utilize that to the fullest extent to make sure they have the best possible program on their risk."

Stacy Regan, deputy treasurer for General Electric Co., underlined the importance of understanding how financial issues play out in insurance programs.

She said her company performs stress tests on their insurance programs "to drive our understanding and expectations as to how they'll actually perform."

The focus of these tests needs to be on how quickly funds can be issued and moved around the globe.

Another question to be examined in these tests is what happens if the fronting insurer becomes insolvent, she said. Will claim settlements be delayed and if so for how long? Would the company receive the full award on a claim or only cents on the dollar?

If the scenario is a negative one, Ms. Regan advised that buyers "need to think about what you can do differently now to minimize your risk to your firm."

Paul Sherbine, leader of Marsh's Market Information Group advised buyers to supply correct and complete information to their broker.

A rebroadcast of the Webinar is available at www.marsh.com.