Willis Concludes Financial Institutions’ Hard Market May Soften in 2010
The hard market for financial institutions (FI) insurance, which has seen insurers push premiums up at renewal by a minimum of 10 to 15 percent, is unlikely to last until the end of 2010, according to the latest Willis FI Index from Willis Group Holdings.
Willis’ fourth quarter FI market update, published by FINEX Global, the broker’s London-based Financial, Executive Risk and Professional Liability business, found that, “while insurers are still concerned about their 2007 and 2008 loss ratios and are, at present, underwriting very conservatively, the expected influx of new markets for 2010 will help to generate more favorable trading conditions for clients.”
Duncan Holmes, Managing Director of FINEX Professional Risks, explained: “The question that everyone wants to get an answer to is how long will these conditions last? To generate the environment necessary for a ‘softer’ market, there needs to be both an excess of capacity and a willingness from insurers to compete for business. We are going to see new capacity enter the market in 2010, but at the moment, most financial institutions insurers are committing their capacity with great care and caution and will continue to do so until they have confidence that the amount of new losses is going to fall considerably, and stay at a lower level. The current state of affairs cannot last forever and at some point in 2010 we expect confidence levels to increase.”
Other findings announced in Willis’ survey include the following:
— FI clients may see premium spikes at the beginning of 2010 as insurers seek to share the pain of expensive reinsurance renewals, with some reinsurers experiencing loss ratios of up to 300 percent over the last two years.
— The average premium change at renewal from September 2008 to September 2009 has more than doubled from 10 percent to more than 20 percent.
— Willis predicts that some green shoots may emerge in the small- to medium-sized financial institutions sector, where those with claim-free histories will drive competition between insurers, resulting in premium reductions.
The Index also assesses different methods for the placement of insurance covers in the wake of the financial crisis, and focuses on the EU Competition Directorate that has been reviewing the subscription method of placing the larger and more complex insurance and co-insurance policies, especially in the London market.
The full text of the Willis FI Index report is available on the Company’s web site at: www.willis.com.
Source: Willis Group Holdings
- Chubb CEO Greenberg: Some Financial Lines Underwriting Practices ‘Simply Dumb’
- 4,800 Claims Handled by Unlicensed Adjusters in Florida After Irma, Lawsuit Says
- Work Safety Group Releases List of ‘Dirty Dozen’ Employers
- ‘Fearless Girl’ Lawsuit by State Street Settles on Eve of Trial
- Report: Vehicle Complexity, Labor ‘Reshaping’ Auto Insurance and Collision Repair
- Property Restoration Industry: A Culture in Need of Repair?
- Millions of Recalled Hyundai and Kia Vehicles, With Dangerous Defect, Remain on Road
- California Chiropractor Sentenced to 54 Years for $150M Workers’ Comp Scheme