Shrinking capacity and rising rates resulting from the World Trade Center disaster dominated talk at the Federation of European Risk Management (Ferma) forum in Barcelona.
FM Global executive vice president Ruud Bosman, one of the first speakers, was upbeat in his summary of how the attacks had affected the insurance industry. "Although this has hit us hard, we’re confident we’ll come out of it," he said. However, he admitted traditional terrorism cover would disappear, reinsurance costs, retentions and rates would go up and availability of capacity and credit quality would fall.
The French Association for Risk Management and Company Insurances (Amrae) reiterated these concerns in its plea to insurers not to milk the situation. An Amrae statement released at the forum said companies were ready to accept rate adjustments as risks changed. "We’ve noticed, however, that insurance companies almost immediately announced cancellations, substantial increases of premiums and deductibles and reductions of capacity, and even cancelled insurance," it said. "We ask insurance companies to not take advantage of this state of shock to increase their insurance rates." Amrae also intends to push for tax exemptions to encourage self-insurance.
Meanwhile, incoming Ferma chairman, Thierry van Santen, said Ferma would ask European governments to relax taxation and accounting requirements on companies. Van Santen considered these measures would help companies that were in financial difficulty due to the hardening market. He considered that insurers had over-reacted to the US attacks by refusing cover wholesale in some areas.
"To say we must exclude terrorism just because we have a big incident in the US is excessive," he said.
