The Risks of Hazard

A new kid is on the block underwriting private flood insurance in Florida today! Neptune Flood Insurance is an MGA combining a wealth of experience and some unique innovations to bring more options for property owners. Plus, it’s a great name for an MGA.

Did anyone reading the Intelligent Insurer last week notice their Most Read highlights? Here it is from November 15:

I don’t know if it was intentional or not, but they made a perfect microcosm of an interesting and important debate resounding through the corridors of insurance conventions.

Both articles are behind the subscription wall (to which I don’t have a key), but the blurbs illustrate the point brilliantly.

The first article is from an interview with Arno Junke, CEO of Deutsche Rück, and he cautions against becoming “obsessed with developing new products driven by technology and fears of competition from new entrants.”

Meanwhile in the second article, Florence Tondu-Melique - European COO of Hiscox, cautions that “digitally-focused new players in the insurance industry are increasingly threatening the market dominance of traditional insurers in a dynamic that could ultimately force the incumbent players to become nothing more than risk carriers.”

At the Risks of Hazard we explore what is happening in the cat underwriting market. Today we can share a bit of good news close to home – our InsitePro team are now working with Chubb Global Markets. It is exciting for us here because this is a group that is leading the entry of “private flood insurance” (i.e. actual flood insurance from the insurance industry) into the US.

As the US gets ready for the Thanksgiving holiday, it’s sobering to think of the wildfires that are burning in the country’s southeast. After months of weather that has been way warmer and dryer than usual, there are several fires burning throughout Kentucky, the Carolinas, Georgia and (worst of all) Tennessee.

As regular readers of The Risks of Hazard know, this blog focuses on the primary underwriting of cat risk, and the benefits of better underwriting that can be realized by insurers and society at large. Thus, catastrophe bonds are a topic that rarely come up in our discussions. However, the protection gap does (and does and does!). When The Intelligent Insurer published this paragraph-length headline - ILS Leads the Way ... and May Help Closing the Protection Gap - it was inevitable that cat bonds would make their debut in the blog.

Cat bonds, or Insurance Linked Securities (ILS), are far removed from the act of underwriting a cat risk – in fact, they are at opposite ends of insurance. Cat bonds are the final divestment of risk from the insurance industry into capital markets, (unless they bypass insurance completely, as with the MetroCat cat bond), while underwriting is how the risks get into the industry. Granted they are so far apart, how does underwriting relate to cat bonds?