Property Damage & Disaster Restoration Blog: Long Island & New York City

Risk Management, Modeling Helped Reinsurance Industry in 2011

Posted on Tue, Apr 24, 2012 @ 11:59 AM

business insurance,risk management,insurance,long island insurance,reinsurance,new york insurance,long island insurance agentIncreasingly sophisticated risk management and modeling techniques helped the reinsurance sector weather near-record catastrophe losses in 2011, according to a report released Monday by Oldwick, N.J.-based A.M. Best Co.

The “Global Reinsurance Financial Review” notes that while the numerous loss events of 2011 cost the insurance industry approximately $110 billion in losses, the reinsurance market has seen only a minimal squeeze on capacity.

“It is reasonable to ask why the market did not turn more broadly, considering all that 2011 offered: significant catastrophe losses, record low investment yields, uncertain financial markets and the downgrade of U.S. sovereign debt,” the report states. “The simple answer is that reinsurance capacity remained ample despite the magnitude of losses and unrelenting headwinds.”

Several factors cited

The report credits several factors to this resilience. One factor is a continuing evolution in enterprise risk management. The industry invested heavily in ERM initiatives in the wake of Hurricanes Katrina, Rita and Wilma in 2005, the report states.

Another factor helping the industry has been advances in catastrophe and economic capital models. A.M. Best said. “These tools significantly helped a reinsurer's ability to better allocate capital within complex risk portfolios,” the report states. “The models, while not perfect, helped keep both individual and cumulative losses in 2011 within stated risk tolerances for most of the global reinsurers.”

Additionally, reinsurers have adopted conservative capital management strategies in response to new pressures coming from regulators and rating agencies.

Increasingly sophisticated risk management and modeling techniques helped the reinsurance sector weather near-record catastrophe losses in 2011, according to a report released Monday by Oldwick, N.J.-based A.M. Best Co.

The “Global Reinsurance Financial Review” notes that while the numerous loss events of 2011 cost the insurance industry approximately $110 billion in losses, the reinsurance market has seen only a minimal squeeze on capacity.“It is reasonable to ask why the market did not turn more broadly, considering all that 2011 offered: significant...

Bill Kenealy

Article originally published on BusinessInsurance.com

                                   April 23, 2012 - 1:42pm

 

Tags: long island, business insurance, risk managemetn, insurance, new york, insurance agent, reinsurance

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