1. Insurance Market Update
May 26 & 27
Insurance Market Update
Simon Delchar - MARSH Global Markets
Lisa Hansford-Smith - MARSH

2. Simon Delchar Managing Director Global Markets
Marsh

3. State of the World-wide Property Market
01 January 2005 Renewal Season - London Market
Catastrophe Perils
Despite loss activity in the USA, Asia & Europe, property rates have continued to fall in 2005 by an average of 10%
Fire Perils
Plenty of capacity & pricing variance, heavily influenced by individual territory results. Rates continuing to fall for accounts with no major loss activity by an average of 15%.
Greater reductions available if market longevity not crucial
Deductibles
Stable, but can look to reduce with good loss record & information.
Generally, not sufficient credit given for increased retentions.
Capacity
No shortage of capacity. Global market capacity in excess of USD 7 billion for fire; less for natural catastrophe depending on location.
Marsh

4. State of the World-wide Property Market 12 months to the present date
Natural Disasters Losses
April Oklahoma Hailstorms USD75-100,000,000
May/June US Midwest Tornadoes USD500,000,000
June Colorado Hailstorms USD625,000,000
June Texas Severe Weather USD175,000,000
June Asian Typhoon Mindulle USD100,000,000
July Japan Floods USD190,000,000
August Asian Typhoon Rananim USD2,000,000,000 (direct economic losses)
August Caribbean/Florida Hurricane Charley USD7,600,000,000
August Asian Typhoon Chaba USD950,000,000
August Asian Typhoon Aere USD269,800,000 (direct economic losses)
August/September Caribbean/Florida Hurricane Frances USD4,700,000,000
August/September Asian Typhoon Songda USD3,000,000,000
September Caribbean/Florida Hurricane Ivan USD11,700,000,000
September Caribbean/Florida Hurricane Jeanne USD4,500,000,000
September Asian Typhoon Meari USD215,000,000
October Asian Typhoon Ma-On USD195,000,000
October Asian Typhoon Tokage USD1,100,000,000
October Japan Earthquake USD450,000,000
December Indian Ocean Earthquake & Tsunami USD ,000,000,000
Marsh

5. Property Placements - Key issues
Intangible Property (data) Crucial for exposure to be evaluated and separate products/risk transfer effected if required.
Contingent Business Interruption Suppliers and Customers Interdependency
Catastrophe Limits Asia - existing operations and growth opportunities
Loss Mitigation
Marsh

6. The Key to Success: Strategic Planning
Quality, relevance & depth of information
Timing
Benchmarking can help validate limits, retentions and pricing
Rating tools ensure a feel for market pricing- don’t let the market dictate the pricing!
PML’s - One common standard
A clear placement plan - Target key markets with appetite and understanding of Technology industry exposures
- Geographic diversity of market to create competition
Pro-active relationship with your insurance/reinsurance panel - Mid -Term Strategic Review Meetings - Visits to key locations
Marsh

7. Market reform Best terms Split terms/ Composite pricing
Potential pitfalls:
- Who is the leader?
- Multiple agreement parties for wordings, claims and amendments
- Could lead to:
delay of policy issuance
inconsistency of coverage
appointment of multiple experts
perceived breach or trust
Marsh

8. Conclusion Rate reductions are continuing and no sign of upturn
Information= differentiation
Relationships are important for most clients and underwriters
Marsh

9. Lisa Hansford-Smith FINPRO
Marsh

10. State of the D&O Marketplace
Companies are now tending towards purchasing Side A or Side A&B only and reducing Side C cover.
We are seeing softening premiums across all industry groups (with the exception of Pharma).
Issues such as poor financials, governance, outstanding claims are still of concern to underwriters.
We are continuing to see increasing levels of capacity – approximately USD 400 million.
Exclusions – some of the hard market exclusions are being removed such as failure to maintain insurance.
Marsh

11. State of the E&O Marketplace
There are several strong Technology lead Errors & Omission markets - HISCOX, AIG, Beazley, Chubb.
Premiums -5% to 10%.
Loss Experience
Uncertainty of what the next high tech issue may bring – i.e. privacy claims.
Capacity
Good levels of capacity available (approx 250 million dollars).
Marsh

12. The State of the E&O Market
What underwriters are not writing from an E&O perspective!!
Single project cover
Single project cover is very difficult to obtain and in most cases not cost effective.
Patent cover
In some cases all IPR cover.
Where are underwriters being cautious
Security liability cover
Cyber and Virus cover
Marsh

13. State of the Marketplace
Tech D&O and E&O Strategies
Underwriter Information/Face to Face Meetings
Start renewals early and ensure that all information is present in submission form.
Explain/introduce CFO/CIO/GC (if possible) to demonstrate coordination, control & process
In terms of E&O coverage:
Milestone management
Meet with contract managers (this is for the E&O coverage)
How does the company handle dissatisfied customers (how soon does it move beyond the project manager to a more senior level manager?)
Marsh