London, November 2, 2012 – In human terms, Hurricane Sandy is a tragedy. In insurance terms it is a stimulus with long term positive consequences for the industry according to the latest analysis of the disaster from BearingPoint.
As a medium severity Catastrophe loss, Hurricane Sandy will encourage US primary property insurers to place more re-insurance orders into London and other markets, leading to an influx of new risk capital players and growing premium revenue, believes Christopher Ling, BearingPoint’s UK head of insurance.
“After 9/11 in 2001, a whole new set of investors entered the reinsurance and specialty market as rates rose by 30% in the following couple of years.
“Since 2002, these capital vehicles have made good returns and the reinsurance market has remained largely profitable, whilst the primary general insurance market is just coming out of a prolonged market cycle dip. As with the rest of the economy, there has been little to stimulate extra demand for US property reinsurance – until Hurricane Sandy.”
The consensus is primary US general insurers are likely to bear the brunt of the thousands of small to medium flood, wet damage, denial of access and loss of profits claims. The net written premium of Lloyds of London is currently some £24.8bn ($40.0bn). Whereas economic total loss estimates have been put at $30bn-$55bn with some $15bn-$20bn needed to fund estimated insurable indemnity losses. The Queens’ fires could hit Cat treaties, but the biggest unknown is the extent of the Loss of Profits indemnity, which is being driven by clear-up resources and power outages.
BearingPoint offers its sympathies to those affected by Hurricane Sandy and its insurance consultancy team is on hand to assist clients with finding the most effective insurance structures for their businesses.
BearingPoint delivers business consulting with management and technology capabilities. As an independent firm with European roots and global reach BearingPoint serves leading companies and public sector organisations world-wide to align and optimise processes, IT and operating models with business strategy. Driven by a strong entrepreneurial mindset and desire to create long-term partnerships, BearingPoint’s consultants are committed to delivering excellence and value to their clients. The firm’s approach to working with clients is highly collaborative and designed to improve business performance, from strategy through to execution. BearingPoint currently employs 3,500 people in 15 countries.
For more information, please visit: www.bearingpoint.com