News MONDAY
16.10.17
Reinsurers will aim to ‘refill the buckets’
the cost of capital on all business segments. That
should stabilise casualty rates, and we may even
see some increases.”
He added that he expects cyber risk to be
a big discussion point at PCI as it becomes
an increasingly important line of business for
insurers and reinsurers alike. This is a growing
line of business for Hannover Re but he said
the company is confident in its understanding
of any aggregation risk in this line—something
that has been highlighted as a concern by some
reinsurers.
“We provide a backstop to clients, covering the
financial losses related to such an event. While we
are aware that there is an element of systemic risk
in relation to this, we do monitor that carefully
and we are confident we have a handle on our
exposures,” he said. n
Axel Freiboth
PCI looks to boost awareness of rises in auto fatality rates
The US property/casualty market must
focus on a number of long-term challenges
that threaten insurers and reinsurers, according
to David Sampson, the president and chief
executive officer of the Property Casualty
Insurers Association of America (PCI).
Sampson told PCI Today that there is a wide
range of issues the PCI is seeking to address
via Federal and state authorities. These include
the need to address the recent historical high
levels of auto losses and auto fatalities, changes
to the Dodd-Frank Act, proposed tax reforms,
and changes to the National Flood Insurance
Program (NFIP).
In terms of auto losses, Sampson said PCI
wants to raise awareness of just how bad auto
fatality rates have become and encourage
policymakers to act.
“We’re very focused on auto loss cost and
drivers on both personal and commercial
lines,” he said. “Auto fatality rates are at 50-
year historic highs and we’re trying to sensitise
regulators and public policymakers on how
dramatic accident frequency and severity trends
are increasing.”
According to Sampson, the reasons behind
these historic high levels of fatalities are many,
“We’re very focused on auto loss
cost and drivers on both personal
and commercial lines.”
and include distracted driving, whereby the
driver’s attention is diverted by talking or texting
on a cellphone.
PCI has persuaded authorities in Texas
to add distracted driving to their list of
vehicular offences. It has failed to get Florida
to do the same, although Sampson said that
it had not given up on trying to get Florida
to reconsider.
Driving under the influence of drugs is
another problem, due to the increase in the
number of people driving under the influence
of opioids and prescription drugs, including
medical marijuana in some states.
Sampson added that the PCI was pressing
for the passing of the HR 1422 bill, also known
as the Ross-Castor Private Flood Insurance
Market Development Act of 2017, which
is designed to promote the development of
a robust private flood insurance market to
compete with the NFIP.
Sampson believes the private market has
the potential to step up when it comes to
covering flood losses. He pointed out that the
NFIP may end up covering flood losses of up
to $15.5 billion from hurricanes Harvey and
Irma, but that private insurers were expected
to cover flood losses of up to $25.5 billion
from the same storms.
Looking at total losses the NFIP was covering
just 37.5 percent of losses, while the private
market covered the remaining 62.5 percent. n
(Continued from page 1) What is more, the
momentum towards rate increases will likely
be supported by providers of collateralised
solutions, many of which have collateral
‘trapped’ in their structures while losses and
claims are calculated. Most have reloaded their
structures but will now be seeking higher rates
to compensate for the fact that they have cash
tied up, Freiboth said.
“They will be looking to earn not only the
cost of capital on their new structures—they will
also need to do the same for the money that is
trapped, so they will be looking to increase rates
as well,” he said.
The biggest question is whether this effect will
also trickle into casualty business, he said. “Our
expectation is that there will be a greater drive
to achieve the minimum rates that at least cover
David Sampson
4 | PCI TODAY | DAY 2: Monday October 16 2017 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com