TAILORED PRODUCTS - CASUALTY

Recent experience has shown an increase in both severity and frequency of losses emanating from the casualty market. These losses can have a dramatic impact on a company’s balance sheet which can potentially damage both the share price and credit rating so it is important that casualty protections are in place to mitigate these spikes and peaks in loss activity.

This increase in size means that casualty catastrophe protection has now become an issue to be dealt with at board level – as the shareholder will carry the ultimate financial penalty should there be any financial surprises and if protection strategies are not in place to overcome sudden loss aggregation.

Carvill provides tailored products that cover a broad range of professions including lawyers, accountants, medical professionals and many more offering a range of insurance and risk management products and services. With over 20 years experience in the casualty clash marketplace, we are fully aware of the importance of strong and effective contract language which is fully reflected in our products.

The landscape in the casualty market has changed significantly in recent years as it has become increasingly exposed to losses of greater frequency and severity. The impact that some of these losses can have on a company’s balance sheet can be disastrous. There are six main areas to be considered:

1. An increase in the number of vertically aggregating exposures from a broader range of insureds and classes.
2. More dramatic swings and financial spikes as losses are happening more frequently and are being reported in shorter timeframes.
3. Loss Migration as what starts out as a single situation “migrates” to different insureds and businesses. For example, the accumulation of lawyers, accountants, banks and financial advisers from the collapse of Enron.
4. Increased diversity of triggers – Natural Perils, Industrial Action, Business practices sparking regulatory action, Financial Collapse, New Products and Terrorism.
5. Loss intensification due to increased regulatory intervention, Class Action law suits and increased tort litigation.
6. 360 Degree Exposure. When a major loss strikes all avenues are pursued for recovery.

With Boards and executives becoming more and more accountable it is important that they look at ways of mitigating these increased exposures and with limitations on the use of Finite Reinsurance Casualty Catastrophe protection is a very effective way of doing this.