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This year may not have been marked by big events such as Hurricane Katrina or the Asian tsunami, but it was far from being a quiet year for risk managers and their insurers.
The global economy held up, China and India continued to boom and Germany hosted the World Cup. But risk managers had to contend with uncertainties in the world such as the ongoing conflict in Iraq and growing concern over climate change.
Former U.S. Secretary of State Madeleine Albright captured the mood in the European risk management community neatly when she told Business Insurance Europe that the big three risks facing business and society at large in the 21st century are climate change and energy security, health pandemics and terrorism (see page 15).
There was plenty of unfinished business with New York Attorney General Eliot Spitzer pursuing insurers in the United States and Bermuda over broker remuneration and finite risk contracts. However, during 2006 Mr. Spitzer turned his attention on insurers, rather than brokers.
But at the end of this year, Mr. Spitzer is to leave the post of Attorney General and become New York's Governor on January 1, 2007. His replacement, New York Attorney General-elect Andrew Cuomo is expected to carry on Mr. Spitzer's work.
The fallout from Eliot Spitzer's investigations was also felt in Europe.
Although not directly related, The European Commission launched its own investigation into competition-related practices among member state's insurers and brokers. European insurers will have an interesting start to the New Year, as the preliminary results of the EC investigation are expected in January, 2007.
In the United Kingdom, the Financial Services Authority has already threatened tough new rules if the industry fails to tackle transparency of broker commissions. The regulator also called on insurance buyers to do more to force the issue with their intermediaries (see page 12).
The reinsurance market has also had a busy year, in part due to the consequence of record years for natural catastrophe losses in 2004 and 2005.
Catastrophe-modeling companies and rating agencies all changed their methodologies, adding to the problem of greater demand and lower supply of catastrophe business. As hurricane claims took their toll, several insurers and reinsurers closed their doors to new business, while previously troubled insurers continued on the road to recovery.
In fact 2006 was marked by the return of mergers and acquisitions activity. Swiss Reinsurance Co. completed its acquisition of the reinsurance and commercial insurance business of GE Insurance Solutions, while consolidation in the Lloyd's market began with Hamilton, Bermuda-based Catlin Group Ltd. offer for its rival, Wellington Underwriting P.L.C.
The Lloyd's market also took on a new chief executive officer when Richard Ward took over from Nick Prettejohn. Mr. Ward soon set about continuing the reform program of the 300-year old insurance market.