President's Blog
Hello and welcome to our webpage. I hope you find everything you need to inform you about us and that you decide to bookmark this page and save it for future reference. This is my very first BLOG and I am a bit of a novice at it. I am hopeful the blog, which I will update as often as possible, will give you a unique insight into and understanding of risk, risk management and insurance and the insurance industry.
For the sake of this first BLOG we welcome any feedback you may have on our newly designed webpage.
I only have a brief commentary to presently offer on our the Insurance Industry for now. Most insurance brokers today will constantly warn you in almost a fear mongering manner that one day the insurance marketplace will once again return to the complex and expensive marketplace it became between 2000 and 2005. Even I was willing to join this “bandwagon” for a while but my mind is changed. I am not saying we will never see a “hard” market again but unlike many of my peers, I read and keep track of what is going on in my industry and what the statisticians, catastrophe modelers, rating agencies, insurers and reinsurers in particular have to say. Recently the general tone has been that the current soft insurance market conditions are likely to continue for several years to come with perhaps a small correction towards the end of 2008. Barring a “perfect storm” type catastrophe scenario, the insurance industry is well capitalized and structured to withstand enormous losses, case in point the continuing soft conditions even following the worst insurance loss year in history after Hurricane Katrina in 2005 after which experts have suggested losses in the area of $100Bn. By comparison 2006 was relatively insignificant and even 2007 a year of wildfires and floods to date has barely approached the 2005 loss levels.
Whilst I do not believe there will be another “hard” marketplace for a while, (historically they do not come about very often), I must offer the suggestion that we introduce a new term and call it a “moderate” marketplace – how original. I believe as building materials and other costs continue to rise we will in time see a slight correction and stabilization in insurance pricing. This is normal and the increases that may be applied will seem reasonable to you. The industry last tried this in 2000 with moderate increases but it did not anticipate the stock market deterioration and tragic World Trade Centre Catastrophe that triggered our most recent and painfully long “hard market”.
Of course with all things speculative there is never accuracy and precision. I may be right, I may be wrong. The best I can suggest to the reader of this BLOG is to always assume a moderate insurance rate increase when setting your budgets and to always seek the advice of your insurance professional well before setting your insurance budget. At the very least if you budget for an increase and you end up with a reduction, the surplus is positive against your results. Now as a businessperson like you, that to me is Sensible Business.
Feel free to contact me directly or to email me if you would like me to write about any subject of interest to you.
Until next time.
Simon Fenn, CIP
President