The good news and the bad–comment

Of course, you have to be careful how you interpret the pronouncements. Everyone has a vested interest-reinsurers naturally want to talk up the market. You will rarely hear a reinsurance executive saying rates are heading south-at best they’ll predict a flattening out of rates, with little movement. On the other hand, reinsurance brokers will be doing the opposite, in their efforts to get the best deal for their insurance clients. My advice (not surprisingly) is to read what the journalists say, not just the press releases from the insurance sector.

The expectation is that rates are unlikely to go up. Soft market conditions are being driven by excess capital combined with a low level of losses. Swiss Re has already revealed that insured losses from catastrophes are down for the first half of 2014 compared with the same period in 2013. And it would seem that so far, (and it is still hurricane season, until at least the end of November, and the peak is in September) Atlantic hurricane activity has been below-average. The forecasts suggest it will be a below-average season, partly because of El Nino (which though it can cause all sorts of problems, generally means a quiet time in the Atlantic).

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So the result is that it should be good news for risk managers come January. Of course, it only takes one catastrophe to potentially turn the market, but with so much capital around, even that is not a certainty-reinsurance markets have become much more resilient in recent years.

Less good news for risk managers, at least those companies that operate, or are planning to, in Latin America. As a feature this month explains, class action lawsuits are on the increase in the region, with countries changing their civil justice systems. Experts say there is a threat of a wave of litigation. This should be no surprise, and is simply part of the globalisation process. Regions cannot be looked at in isolation, or treated differently. Everyone is aware of the litigious nature of the US, but that does not mean that other regions should be treated any differently. That is why a coordinated global insurance programme is so important-to ensure consistent coverage worldwide.