Press Releases: Stormy Season for Insurers
Stormy Season for Insurers
“Rising reinsurance rates and falling capacity have left some insurers and US energy producers with more to fear than in past years as the Gulf of Mexico hurricane season begins today. A severe storm season would put "big pressure" on the Gulf energy industry, according to brokers at Marsh, as producers have been left with little or no insurance cover.”
By Paul J Davies in London, from http://www.ft.com
June 1, 2009
Rising reinsurance rates and falling capacity have left some insurers and US energy producers with more to fear than in past years as the Gulf of Mexico hurricane season begins today.
A severe storm season would put "big pressure" on the Gulf energy industry, according to brokers at Marsh, as producers have been left with little or no insurance cover.
A cutback in the state reinsurance fund has left insurers of Floridian buildings less able to afford reinsurance, says research.
Hurricanes Ike and Gustav made last year the third-costliest storm season in the Gulf, while the financial crisis has dramatically cut the amount of capital that hedge funds put into the market.
Traditional reinsurance capacity fell by 10 per cent for the critical June 1 renewal season this year, according to a report from Guy Carpenter, the Marsh-owned research group. Capacity from hedge funds dropped by about one-third.
Demand for reinsurance for lower-end risks increased after the Florida Hurricane Catastrophe Fund, the state-run reinsurer, cut $2bn in extra liquidity support for insurers.
Lara Mowery, head of global property specialty at Guy Carpenter, said property insurers were squeezed as primary insurance rate increases were restricted by local regulators.
Some were relying on inter-company loans or bank credit lines, to ensure they had enough cash to meet claims, she said. "If there are larger losses and insurers need to draw on these new facilities, the mechanisms of that could be tricky."
Gulf oil and gas producers are in worse shape, says Bertil Olsson, energy leader for Marsh's US energy, mining and power practice.
Primary insurance capacity is down 30-40 per cent and companies that want insurance have faced price increases of 20-100 per cent.
June 1, 2009
Rising reinsurance rates and falling capacity have left some insurers and US energy producers with more to fear than in past years as the Gulf of Mexico hurricane season begins today.
A severe storm season would put "big pressure" on the Gulf energy industry, according to brokers at Marsh, as producers have been left with little or no insurance cover.
A cutback in the state reinsurance fund has left insurers of Floridian buildings less able to afford reinsurance, says research.
Hurricanes Ike and Gustav made last year the third-costliest storm season in the Gulf, while the financial crisis has dramatically cut the amount of capital that hedge funds put into the market.
Traditional reinsurance capacity fell by 10 per cent for the critical June 1 renewal season this year, according to a report from Guy Carpenter, the Marsh-owned research group. Capacity from hedge funds dropped by about one-third.
Demand for reinsurance for lower-end risks increased after the Florida Hurricane Catastrophe Fund, the state-run reinsurer, cut $2bn in extra liquidity support for insurers.
Lara Mowery, head of global property specialty at Guy Carpenter, said property insurers were squeezed as primary insurance rate increases were restricted by local regulators.
Some were relying on inter-company loans or bank credit lines, to ensure they had enough cash to meet claims, she said. "If there are larger losses and insurers need to draw on these new facilities, the mechanisms of that could be tricky."
Gulf oil and gas producers are in worse shape, says Bertil Olsson, energy leader for Marsh's US energy, mining and power practice.
Primary insurance capacity is down 30-40 per cent and companies that want insurance have faced price increases of 20-100 per cent.