Hurricane Ivan halts softening in energy sector: Guy Carpenter

The damage caused by Hurricane Ivan’s assault on off-shore oil producers halted expected reinsurance rate softening in the energy sectors, according to a new report by reinsurance broker Guy Carpenter & Co.
In its “Marine & Energy Reinsurance Review Report 2005”, Guy Carpenter says losses to the offshore energy sector as a result of Hurricane Ivan, which hit the Caribbean and southeast U.S. in September, are expected to easily exceed US$2 billion. “Originally, we had been predicting a discernible easing of rates for 2005 but Ivan has prevented this,” the report notes. While a general softening of rates did not happen, those with “excellent” loss records and/or reduced exposures were able to negotiate some rate reductions. Accounts with losses, however, saw rate increases.
For marine hull underwriters, the construction risks market is receiving strict treatment on the back of rising loss costs the report notes that this market representing income of just US$80-100 million annually saw losses of US$738 million in the 15 months between October 2002 and January 2004. While the market did not “dry up” as brokers may have feared, underwriters have instituted changes, including raising premiums, reducing average line size, and implementing stronger risk control over accounts.
The full report can be accessed at www.guycarp.com.