What’s New: In Brief (April 22, 2008)

In order for the current soft market cycle to differ from previous ones, the current market must be able to respond to inadequate profit opportunities with swifter adjustments in market capacity and corresponding rate increases, according to a FitchRatings report.
In its report, the Property/Casualty Underwriting Cycle, Fitch says further premium rates declines are unavoidable and the market is heading towards a return to underwriting losses, given the level and continued expansion of market capacity.
“If greater underwriting discipline has indeed become imbedded with market participants, perhaps we will see necessary capacity withdrawals and a corresponding reversal in pricing trends at 105% combined ratio, rather than the 110% or above that past severe soft markets reached before the market shifted,” the report reads.

More than 58 weather stations to measure wind speeds for a new securities index have been installed in preparation for the hurricane season, Risk Management Solutions (RMS) and Weatherflow announced.
The stations, built to withstand hurricane-force winds, will provide wind speed data for the WindX parametric index, supporting the transfer and trading of catastrophic hurricane risk in the capital markets.
Wind speeds in specific locations are measured and entered into the index. The measurements signal whether a range of financial structures including over-the-counter derivative contracts, catastrophe bonds and industry loss warranties have been triggered, a joint release notes.