—Tina Bentley, Hylant Group

As we approach the end of hurricane season, it is a good time to examine the long-term impact that the storms will have on the property insurance market. The loss from Hurricane Katrina alone is expected to reach $40 billion – nearly twice that of the World Trade Center attacks in 2001.

While Katrina was the costliest single natural disaster in U.S. history, Rita and Wilma may now raise the toll past $70 billion. But surprisingly, this has not had the same extreme adverse effect on the property market, as did the Sept. 11 disaster. Sept. 11 left an indelible mark on the insurance industry, with an immediate withdrawal of capacity that sparked incomplete programs, dramatic price increases, higher deductibles and reduced coverage availability.

This year, when Gulf coast storms threatened similar effects, many braced for the financial aftershock, particularly businesses with imminent renewals. But what followed were wide and varied reactions, ranging from complete quote withdrawals and refusals to negotiate terms or conditions – to no perceptible reaction at all. The one common result of the storms has been increased renewal pricing. Of course, this has varied depending on the quality of the risk, past loss experience, wind exposure and losses from the hurricane itself.

Absent the hurricane losses, the industry was on target for record profits this year, estimated at $62 billion. Reports released by some carriers for the third quarter are still showing increased profits over the same period last year despite hurricane reserves. Rather than having an impact on capital, the catastrophe losses of 2005 might likely be absorbed by net profits.

Additionally, there has been an immediate influx of new capital into the market as carriers position themselves to take advantage of an emerging hard market and higher premiums. To date, approximately $11 billion of new capacity has been raised, with Bermuda markets leading the charge. This capital is emerging from both existing markets such as ACE, Montpelier Re and Endurance, who recently announced an additional $2.5 billion of capital collectively and several new startup operations, such as Amlin Bermuda, Hiscox Bermuda, Validus holdings, New Castle Re and Omega Specialty.

As we approach 2006, we may see the loss totals for the hurricanes rise as the focus shifts from assessing property damage and insureds start to realize the financial impact on their businesses. Business interruption, contingent business interruption and extra expense claims will start to emerge, the full extent of which is still unknown. It is too early to determine if the hurricane losses are enough to sustain a hardening market or whether the early release of capital in a profitable market will soften the impact. The true impact will become clear at treaty renewals at the beginning of the year.

Christina.Bentley@hylant.com

Within Hylant is a smaller, specialized practice — the Large Account Practice — equipped with additional resources, advanced training and certifications designed to better serve clients in the Fortune 1000.

With more than 50 account executives, Hylant's Large Account professionals comprise a diverse mix of experience and expertise — all with measurable success serving large accounts. From complex environmental issues to global property coverage, Hylant's Large Account Practice serves billion-dollar businesses with national expertise and the responsiveness of a regional brokerage.

At Hylant, our job is to help clients manage their risk. Choosing the best insurance broker should be the first step. Leave nothing to risk. Choose the best.

New Account Accreditation Announced—
Major Contract with Kellogg's Kicks Off Practice

Toledo, Ohio—Hylant Group, the nation's seventh largest privately held commercial insurance brokerage, has launched a dedicated Large Account Practice with additional resources, advanced training and a new certification for specifically qualified and proven account executives. the new practice is designed to enhance and expand large account services already provided to major corporations.

"To support the launch, Hylant has recruited several new professionals with extensive knowledge in serving the specific needs of companies in the Fortune 1000," said Hylant chairman and CEO, Pat Hylant.

"We hand picked a group of elite individuals both from within Hylant and from the outside who lead the industry in serving specific needs of large accounts," he said. "This practice goes well beyond simply attracting larger clients; this truly is a specialty practice that focuses on unique expertise and resources."

READ MORE >>>>