December 8, 2009 by Canadian Underwriter
The composite rate for commercial property and casualty insurance in the United States was down 5% for Nov. 2009, MarketScout reports.
The soft market may be prolonged if mega-brokers begin to acquire small- and middle-market brokerages, MarketScout says in its online index ‘Market Barometre.’
“If all of the mega-brokers start acquiring independent retail agencies, they could easily buy 30% to 40% of the market in three or four years,” it says.
“Mega brokers would be able to use their muscle to cut better deals for themselves and their clients.”
Although this mantra to grow middle market business occurs about every 10 years or so, it may be more serious this time around, MarketScout suggests.
“The big boys are not trying to grow middle market business internally as in years past. This time they plan to buy instead of build.”
Piracy attacks more than doubled, from 114 during the first half of 2008 to 240 in the first half of 2009, because there is a new area of operation in Africa, reports Lloyd’s.
In Lloyd’s latest issue of Market magazine, Rupert Atkin, CEO of Talbot Underwriting, said the piracy trend emerging from Somalia presents different circumstances to those seen in the Malacca Strait.
Unlike attacks in the Malacca Strait, attacks in Somalia do not rely on the pirates physically threatening crews. Instead, pirates tend to use crewmembers as a negotiating tool.
As a result, Atkin continued, insurers ironically are paying out for physical damage policies without there being any physical damage.
“We are settling on a ‘sue and labour’ basis and paying the ransom to get the ship back to mitigate loss,” he told Markets.
“This type of peril was not originally envisaged or contemplated, so now we have drafted a policy specifically to address the risks associated with piracy.”