Whilst the Egyptians cast their vote this week in the country’s first free election, the insurance community gathered for the 29th GAIF conference in Morocco. That 1,800 international delegates showed up in Marrakesh, suggests the appeal of the Middle East and North Africa region is undiminished despite the upheaval of the Arab spring. However, a survey sponsored by the Qatari Financial Centre accurately captured the big issue for reinsurers. Whilst insurance demand continues to grow faster than the increase in GDP; over-capacity of supply especially in the commercial sector remains the real obstacle to profitable business development. With 90% of respondents viewing premium rating as inadequate and 70% assessing the prospects of making a return as low, it is hardly a ringing endorsement for those tempted to invest capital and resources into the local insurance sector.
In releasing its annual review of political risks last month Aon downgraded 37 countries including UK and much of austerity hit Europe as the threat to businesses arising from civil unrest intensifies. Representatives at GAIF were quite frustrated with the reinsurers’ response to property damage claims occurring during the Arab Spring and in particular their determination of when a riot becomes a popular uprising becomes a civil war. Just as archaic as the policy language according to the ABI is the compensation system in the UK which is hardly a surprise as it dates back to 1886. Uniquely involving the police authorities in claims handling, the process has proven to be too bureaucratic, leaving many victims unable to get on with their lives following the riots last summer.
A $2 billion loss, or possibly more, at JP Morgan suggests the first real failure of post 2008 bank regulation and there will surely be implications. That the root cause of this “egregious error”, as CEO Jamie Dimon described it, was a strategy to mitigate risk by laying off massive hedges has alarmed many. Insurers are typically far less innovative with few firms choosing to enter complex derivative arrangements to match their assets and liabilities. Mischievous as always Lloyd’s grandee Robert Hiscox in one of his last speeches in London prior to retirement, questioned whether the Bank of England was sufficiently experienced in insurance. It is a serious point as our industry since April has been regulated by them alongside other financial institutions so their reaction to a JP Morgan style event might impact us more directly.
Delivering groceries to the international space station at first glance might not appear to be a giant leap forward, but the fact that the cargo is being transported by a private company SpaceX is more than a small step in the evolution of space travel. If more commercial enterprises follow PayPal founder Elon Musk by investing in the sector then we could see greater opportunities for space related business. Insurers will have their feet firmly on the ground, however, as it is the value of the cargo which generates premium revenue and the big ticket items, satellites, will still be launched by government agencies for some time.
For those irritated by their kitchen wall, oven and radio clocks being in a permanent state of disagreement about what actually the time is, read on. Clinical decisions in modern hospitals are based on centralised electronic medical records (EMR) taking data feeds from multiple devices. The interval and duration of administering medication is mostly based on ERM information. There is a high risk of drug dosing errors and missed or repeated procedures, however, because the clocks on all these devices are unsynchronised. The results of a survey recently presented at the CPS Week conference in Beijing found that only 3% of 1,700 clocks examined were accurate and one in five were more than 30 minutes out. Amazingly one ultrasound machine was running 42 years early! Health and medical malpractice insurers will be relieved to know that at least in US, there is a plan to put all devices on a network time protocol (NTP); 1985 technology as it happens that keeps PCs and mobile phones on time.