What’s new: In brief (September 14, 2004)

A new study by Analysis Group, commissioned by U.S. insurers and reinsurers, finds if the Terrorism Risk Insurance Act is not extended beyond 2005, and a catastrophic terrorist attack occurs, tens of thousands of jobs would be lost and thousands of commercial bankruptcies would occur. Even without an attack, the lack of adequate, affordable terrorism coverage would produce significant economic drain. The report also finds that TRIA has not prevented development of private sector coverage, but rather has “filled the gaps” which would otherwise have occurred.

A.M. Best has downgraded Allstate Floridian in the wake of losses suffered as a result of Hurricanes Charley and Frances. While Allstate Floridian Insurance Group is a separate entity, and has its own rating, it is the dedicated producer of Florida property business for Allstate Insurance Group. Allstate Floridian has been downgraded to “B+” from “A-“, and remains under review with negative implications. Charley and Frances have led to a surplus decline of approximately 40%, and this is independent of any damage which might be wrought by Hurricane Ivan.

The life reinsurance market could face a price and capacity crunch this year, with fewer players controlling the market, says a new study by Conning Research. Primary life insurers are increasingly dependent on reinsurance, specifically in new term life business, but face a much tighter reinsurance market due to consolidation. In fact, between 1994 and 2003, new recurring reinsurance grew by almost 400%, while the number of life reinsurers with share greater than 2% dropped from 16 to 10,” notes Stephan Christiansen, director of research for Conning.