October 2013

Talk Around the Bazaar

In the course of the past few months, there have been a handful of new syndicates entering the Lloyd’s market. All have first class paper and proven underwriters. One, however, has a different approach. Cobalt Underwriting has been launched to provide Shariah compliant products to commercial clients. The deputy chairman of Lloyd’s is quoted as saying that the Lloyd’s and London market has recognised the need to provide such products and cited the underwriting creativity in London which has embraced this development. Advisen reports on this at http://eurfpn.advisen.com/fpnHomepagep.shtml?resource_id=205290236-2065642119&userEmail=george.worsley@worldwiderisksolutions.com#top

As the news of financial downturns recedes in its current cycle (touch wood), there are reports of US$100 billion of fresh capital entering the reinsurance market. Although one can welcome this development with the question: where was it when we really needed it, this impetus will provide primary insurers with wider support for developing their range of products. Insurance Insight discusses some of the issues at http://www.insuranceinsight.com/insurance-insight/news/2293350/usd100bn-of-reinsurance-capital-to-enter-market-says-aon-benfield?wt.mc_ev=click&WT.tsrc=Email&utm_term=&utm_content=Read%20more%20%C2%BB&utm_campaign=9%20September%202013&utm_source=Insurance%20Insight%20Daily%20Newsletter&utm_medium=Email

According to reports, Pakistan is to set up a National Insurance Terrorism Pool. With more than US$2 million reinsurance premiums being lost each year because of the lack of terrorism coverage in Pakistan, the Securities and Exchange Commission is seeking to curb the flow of money outside the country. The pool will be managed by the Pakistan Reinsurance Company who has experience in managing the “ECO Pool” established by Iran, Turkey and Pakistan. For further detail, please go to the article published by Business Recorder at http://www.brecorder.com/money-a-banking/198/1229682/

The prime minister of the UK stated recently that it is unfair to refer to Guernsey as a tax haven. He recognised the positive steps taken by the island and other Crown Dependencies in relation to international transparency and cooperation. Guernsey is doing well this year, showing signs of renewed growth in the second half of this year as we can read in their news release, http://www.guernseyfinance.com/press-room/news/2013/09/guernsey%27s-finance-industry-shows-stability-in-q2,-signs-of-growth-in-q3/

The Tunisian Ministry of Finance has given its approval to ACE to establish a reinsurance operation in the country. This will enable ACE to service the facultative reinsurance needs of North Africa more widely as Business Insurance reports at http://www.businessinsurance.com/article/20130912/NEWS04/130919924?tags=58|380|334|371|81|80|76

“The UK insurance industry is the third largest in the world and the largest in Europe. It is an essential part of the UK’s economic strength, managing investments amounting to £1.8 trillion (equivalent to 25% of the UK’s total net worth) and contributing over £10 billion in taxes to the Government. It employs around 320,000 people in the UK alone; the insurance industry is also one of this country’s major exporters, with 26% of its net premium income coming from overseas business.” We quote these words from the website of the Association of British Insurers’ latest publication: UK Insurance Key Facts 2013. This 20 page document can be downloaded from the ABI’s website at https://www.abi.org.uk/Insurance-and-savings/Industry-data/Free-industry-data-downloads/UK-Insurance-Key-Facts-2013 and we recommend our readers to do that – pleasant reading!

After dithering for longer than most reinsurers regard as “no longer even a joke”, the Susep has finally approval for the IRB-Brazil Re privatisation. With a sigh of relief, BN Americas provides basic details at http://www.bnamericas.com/news/insurance/susep-gives-final-approval-of-irb-brasil-re-privatization1 and we can be sure, more news and comment will follow

Chinese insurance officials said during a meeting of The Federation of Afro-Asian Insurers and Reinsurers in Beijing that the country will take stronger measures to boost the insurance sector. This welcome news is reported comprehensively by Hexun at http://insurance.hexun.com/2013-09-18/158114520.html and for the few of us who cannot read Chinese, Business Insurance has kindly summarised this at http://www.businessinsurance.com/article/20130918/NEWS09/130919826

The Costa Concordia disaster is one of the highest profile man-made catastrophes of recent times. The personal tragedies of many following upon the personal failures of few have been well-recorded in the press. Many of us will have been impressed by the creativity and courage of the team who took on the task of salvaging the wreck from the coast off the island of Giglio and our good friends at Cover have provided a spectacular link at http://www.cover.co.za/news/costa-concordia-salvage-spectacular

Want to expand your sales operation overseas? You’re not alone. According to a recent IDC report more than eight out of ten businesses now say that growth of sales revenues is their main motivator in looking beyond geographical borders, replacing years of cost cutting and operational efficiency improvements. The imperative is now to grow the top line through expansion into new markets. However, operating and investing overseas can be a headache. Different regulatory requirements, local employment law and complicated taxation rules can all put your company at risk of non-compliance or, worse, failure. To find out more about the challenges of operating overseas, TMF has provided a link to a studious and well-structured paper at http://www.tmf-group.com/goglobal which we can highly recommend

As referred to in our Comment of the Month and following on our Spotlight article on Swiss Re and “Mind the Risk: a global ranking of cities under threat from natural disasters,” the Clinton Global Initiative has just announced a global partnership to promote resilience in 100 cities around the world. Business Insurance has the story at http://www.businessinsurance.com/article/20130925/NEWS06/130929898#full_story

Famous quotations. Here are some words of wisdom which have survived the passage of time…

· “I have hardly ever known a mathematician who is capable of reason” – Plato

· “Don’t think of retiring from the world until the world will be sorry that you retire” – Samuel Johnson