The Property-Casualty insurance industry's "outstanding year" is noted in recent posts here. The entire Insurance Industry is expected to have record profits in 2006, earned not only from increased CatClaims premiums but from higher returns on investments -- and the fortunate fact that there have been few if any Hurricane claims or other CatClaims so far in 2006. The "outstanding year" description comes from one of the major participants.
Berkshire Hathaway Inc. describes the conditions that have produced these "highly satisfactory" earnings, for example, in its News Release dated Friday, November 3, 2006. This press release further advises that "clearly, our insurance business has benefited in a major way from the absence of catastrophe losses. This is due not to managerial brilliance but rather to good luck. Last year, conversely, we got clobbered by a spate of hurricanes, more of which we will surely see in the future." Berkshire Hathaway Inc. News Release, November 3, 2006. This press release is unsigned. A report attributes it, however, to Mr. Warren Buffett. Karen Richardson, "Buffett Cites Berkshire's 'Luck' As Net Soars on Hurricane Bets" (Wall Street Journal, Saturday/Sunday November 4-5, 2006, page B3, col. 5) (subscription required). It is also reported that the Berkshire Hathaway results will be a record for its Insurance Company subsidiaries.
The Property Casualty Insurers Association annual meeting is scheduled this year for Sunday, November 5 through Wednesday, November 8, 2006 in Seattle, Washington. A review of PCI's site fails to reveal the agenda, but here is a link to information regarding this annual meeting: PCIAA. It is very likely, of course, that the "outstanding results" and "highly satisfactory earnings" in the CatClaims Insurance Industry will be discussed. See, for example, the news report by Liam Pleven, "The Week Ahead/Insurance - Property Insurers See Blue Skies" (Wall Street Journal, Saturday/Sunday, November 4-5, 2006, page A2, col. 4)(online subscription required). Cautions are certain to be announced as well that the lack of catastrophes cannot be expected to continue, i.e., that there will be future CatClaims which must be paid and that the Property-Casualty sector's record profits are "sure to decline next year" to quote verbatim the words of Berkshire Hathaway.
During this same time, commercial insurance is the victim of a triple whammy: Commercial insurance is reported to be (1) in such short supply, or (2) so expensive when it is available that many businesses simply cannot afford it, or (3) offering so much less coverage for so much more money, that Gulf Coast businesses either cannot continue or reopen. For example, see Rebecca Mowbray, "Business Insurance Costs Are Hindering Recovery, Policies Can Now Cost 10 Times as Much" (New Orleans Times Picayune, nola.com, Sunday, October 8, 2006). This is another catastrophe left behind by the recent Hurricanes, along with the same triple whammy for homeowners in Gulf Coast States whose homes may be located two to three hours' drive, or more, from the Gulf Coast. One difference is that Commercial Insurance is less regulated than Homeowner's Insurance, if it is regulated at all, so that the whammy can be even more painful for businesses than for homeowners.
Any reasonable discussion of options for CatClaims Coverage availability should address all these concerns. As they said in the movie Apollo 13, "Failure is not an option."
REMINDER: THE CONTENTS OF THIS BLOG DO NOT MAKE AN ATTORNEY-CLIENT RELATIONSHIP. ALWAYS CONSULT THE CASES AND LAWS OF EACH PARTICULAR JURISDICTION AND AN ATTORNEY IN AND FAMILIAR WITH THE PARTICULAR LEGAL ISSUE, THE JURISDICTION AND ITS LAWS, WHENEVER YOU TRY TO ADDRESS OR RESOLVE ANY LEGAL QUESTION.
Comments