SOURCE: A.M. Best Co.
“Workers’ compensation is in a very different place today than where it was 10 years ago,” said Russ Johnston, who runs U.S. and Canada casualty operations for Chartis.
AIG said one reason it was leaving the stand-alone business was the Affordable Care Act. AIG “concluded that there is increased vulnerability to the risk of further cost-shifting to the excess workers’ compensation class of business in particular,” the company said in a regulatory filing.
Under the ACA, some 33 million people will gain health insurance coverage at a net cost of $1.1 trillion. That increase in the insured population will result in an increased demand for doctors, resulting in a shortage of primary care doctors and some cost shifting, said Don Hurter, senior vice president of Chartis’ medical management services.
In BestWeek Europe, the fear that gripped the world’s businesses in 1999 as the calendar inched toward the year 2000 gave a boost to cyber insurance, a line that is now firmly established in the casualty market.
Gareth Tungatt, cyber underwriter at Barbican Group Holdings Ltd.’s Syndicate 1955, divides the cyber market into business interruption and the liabilities that can result from the loss or misuse of data stored in cyber networks.
Also in BestWeek U.S./Canada, with Hartford Financial Services Group announcing plans to focus on its property/casualty, group benefits and mutual funds businesses, it joins a growing number of multiline insurers moving toward taking the “multi” from their focus.
Last week, Hartford Financial HIG -3.02% said it’s placing its U.S. individual annuity business into run-off and pursuing “a sale or other strategic alternative” for its individual life insurance and retirement plans businesses and Woodbury Financial, its broker-dealer subsidiary.
The insurer said it would focus on its property/casualty insurance, group benefits and mutual funds businesses, “each of which has a competitive market position, strong capital generating ability and lower sensitivity to capital markets” (Best’s News Service, March 21, 2012).
Barclays views the plan “as acknowledgement that the U.S. multiline insurance business model faces challenges,” wrote Jay Gelb, an equity analyst with Barclays in a March 21 research note, noting American International Group AIG -1.48% as the other multiline insurer.
Ernie Csiszar, former insurance director of South Carolina and former president of the National Association of Insurance Commissioners, said multiline does face challenges.
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