What’s New: In Brief (October 31, 2007)

The severity of the insured losses from the 2007 California wildfires will not likely have a significant impact on the earnings of U.S. property and casualty insurers rated by Moodys.These wildfires have the potential to be the costliest wildfires in history, and they are in the running as the largest catastrophe event impacting U.S. carriers this year, Pano Karambelas, a senior analyst with Moodys, said in a report.Even so, property and casualty insurers are well equipped to handle the losses, given the past two years of hard market pricing and benign catastrophe experience, says Karambelas.The brunt of the losses will be felt by both admitted and excess surplus lines insurers, with significant residential lines market share in the affected areas, he said.To a lesser degree, Karambelas predicted, there will be claims activity from automobile and business interruption coverage due to the mandatory evacuations.

Ninety-three per cent of U.S. insurers surveyed by Fulbright Jaworski LLP faced at least one new lawsuit in the past year, with one-third facing more than 20 new actions.More than a quarter of those carriers surveyed expect their caseload to increase next year, a release from Fulbright says.While 50% have class actions pending against them, 16% have more than six class actions pending. This litigation action comes with a hefty price tag. The study reported that nearly one-third of the firms surveyed said they spent at least US$5 million on litigation, excluding costs of settlements and judgements, while 54% reported spending over US$1 million per year on business disputes.