MONTE CARLO, Monaco--Sept. 13, 2004--Rising threat of torts,
financial security and solvency emerge as key issues in a survey
commissioned by The Insurance Leadership Institute of GE Insurance
Solutions (NYSE: GE) and independently conducted by Tillinghast.
Commenting on the report titled Facing the Future: Challenges for European P&C Insurers, Ron Pressman, Chairman, President and CEO of GE Insurance Solutions, said: This survey helps bring some clarity to the discussion of European market issues.
It is a surprise that the top emerging claims issues in the EU appear to be tort and litigiousness. But it's no surprise that financial security and solvency still weigh heavily on the minds of European insurers.
Tort Trends
Escalating tort costs (58 percent), the increase of litigiousness (55 percent), natural catastrophe losses (43 percent) and fraud (42 percent) top their list of major claims issues affecting European
insurers.
Many of these findings confirm what we've been hearing in the marketplace, Pressman said. But we were surprised that European tort trends, not just U.S. tort costs, were pressing issues on the minds of these respondents. The vast majority believed that the general
increase in litigiousness in Europe would lead to substantially higher liability claims.
Security and Solvency
The survey revealed that market concerns about security and solvency apply to reinsurers as well as primary insurers. Respondents to the survey also agreed that the industry's financial strength is a major concern. In addition, 87 percent of these insurers believed that the importance of insurers' own financial strength ratings would increase dramatically.
When asked about the advantages of consolidation in the reinsurance marketplace, 100 percent of respondents agreed that consolidation has improved security.
Other Findings
The survey also identified other issues for insurers and the market:
Reinsurer Qualities
-- 100 percent indicated that financial security and top-level ratings highly influence their reinsurance-buying decisions
-- 93 percent felt that competitive rates are an important consideration when choosing a reinsurer
-- 89 percent said that the ability to maintain long-term business relationships leads the list of qualities they seek in a reinsurer
Solvency II
-- 95 percent indicated that effective and competent risk management is an important way to reduce the solvency capital requirements
-- 84 percent said Solvency II would lead to increased transparency in an insurer's financial strength/weakness
-- 71 percent agreed that Solvency II is an effective measure to prevent insolvencies
-- 68 percent felt that Solvency II puts small insurers at a disadvantage because some lack the resources to develop sophisticated individual risk models
Cycle Management
-- 85 percent felt well prepared for the next market cycle
-- 69 percent agreed that insurance cycles last about five years
-- 58 percent said the current hard market will last at least two more years
-- 32 percent cited managing the cycle as one of the top strategic issues their company will face over the next five years
The European Executive Survey 2004 was conducted between March and July 2004. A total of 79 insurers responded -- mainly small- to medium-sized insurers operating in the United Kingdom, Germany, France, Italy, Spain and Scandinavia.
More detailed information about the survey findings will be published in a series of press releases issued during the Monte Carlo
Rendezvous conference.
With more than $50 billion in combined assets, the GE Insurance Solutions group of companies is one of the world's leading providers of commercial insurance, reinsurance and risk management services. Members of this group have been protecting people, property and
reputations for more than a century.
Additional information is available at www.geinsurancesolutions.com.
The Tillinghast business of Towers Perrin provides global actuarial and management consulting to insurance and financial services companies and advises other organizations on risk financing
and self-insurance. The company helps clients with issues related to mergers, acquisitions and restructuring; financial and regulatory reporting; risk, capital and value management; and products, markets and distribution.
For more information and an executive summary of the survey, contact:
GE Insurance Solutions
John Novaria
+1-816-448-7608
[email protected]
Tillinghast
Alison Stock
+44-20-7170-2678
[email protected]
--30--SL/dx*
CONTACT: GE Insurance Solutions
John Novaria, 816-448-7608
[email protected]
or
Tillinghast
Alison Stock, +44-20-7170-2678
[email protected]
Jeff Wilson
GE Capital Corporate Finance
[email protected]
1-203-749-6340