Fine – being of an age that worked through the LMX debacle… I can tell you that the current softness of the R/I market is very déjà vu to 1982-5. This time the flaw driving at least part of the softness seems to arise in excess of loss pricing where in my opinion the culprit is the principle of (or lack thereof) of concurrency.
Concurrency means the accurate duplication of cover conditions between a primary and any successive or contributory cover including excess of loss and umbrella. The current fashion in the London market is to compartmentalize discrete bits of excess layers both horizontally and vertically to achieve a ‘limit’.
Compartmentalization may suggest theoretically lower prices to inexperienced insurers … but the fly in the DNA will out when non-concurrent conditions appear in claim scenarios … such as Sandy.
The ABA has cautioned counsel to insurers to tread very carefully as there is no uniform rule applicable to other insurance and non concurrency in any of our 9 jurisdictions.
So, is the R/I market soft or are insurers playing with nitroglycerine … again?
Fine – being of an age that worked through the LMX debacle… I can tell you that the current softness of the R/I market is very déjà vu to 1982-5. This time the flaw driving at least part of the softness seems to arise in excess of loss pricing where in my opinion the culprit is the principle of (or lack thereof) of concurrency.
Concurrency means the accurate duplication of cover conditions between a primary and any successive or contributory cover including excess of loss and umbrella. The current fashion in the London market is to compartmentalize discrete bits of excess layers both horizontally and vertically to achieve a ‘limit’.
Compartmentalization may suggest theoretically lower prices to inexperienced insurers … but the fly in the DNA will out when non-concurrent conditions appear in claim scenarios … such as Sandy.
The ABA has cautioned counsel to insurers to tread very carefully as there is no uniform rule applicable to other insurance and non concurrency in any of our 9 jurisdictions.
So, is the R/I market soft or are insurers playing with nitroglycerine … again?