Financing Catastrophic Loss Amid Financial Catastrophe: What Have We Learned?

This PowerPoint report, presented by Robert Hartwig, president of the Insurance Information Institute, at the AonBenfield Catastrophe Summit, discusses the lessons that insurers and reinsurers should learn from the recent financial crisis. The first section of the presentation provides an overview of and outlook for the property/casualty (P/C) insurance industry after the financial crisis, focusing on profitability and performance in personal and commercial lines as well as reinsurance. It also looks at premium growth, which is primarily driven by the industry’s underwriting cycle, not the economy and underwriting performance, and provides a catastrophe loss review. The second section discusses the seven lessons that must be learned from the crisis including: capital becomes scarce exactly when it is most needed; capital becomes most expensive when it can least be afforded; the alternative risk transfer (ART) market is not immune to financial turmoil; investment earnings shrink just when they can really be used; government-run insurers are not immune to financial crises despite what they think and how they act; exposures get slammed and the P/C insurance and reinsurance industries are resilient and strong.