... has rejigged its kidnap & ransom product, with crisis response for clients now being supplied through a partnership with Terra Firma. The K&R team is led by underwriter Jonathan Beck, who joined recently from Hiscox.

Rating agencies are “the only regulation force that truly looks at solvency in the US business”, according to Kevin Kelley, CEO of Bermuda-based Ironshore. Speaking at the Insurance Day Summit Bermuda, Mr Kelley said that state regulation tended to be focused on consumer issues, although he accepted that this might change “with pressure and instruction from Washington”. At the moment, however, “by and large the only de facto regulation force in my opinion is the rating agencies and quite frankly I think they do a very good job under very difficult conditions”.

Insurers proceeding on the basis that rate rises this year in a hardening market will get them out of any possible trouble should beware of unjustified optimism, according to Chris Hitchings, analyst at Keefe, Bruyette & Woods. Mr Hitchings noted that, although investment returns had fallen, the market was not yet in sufficiently bad shape to cause a significant hardening of the market. Although the breaking-up of AIG would not turn the market on its own, it would provide Lloyd’s insurers with opportunities, he said at the Association of Lloyd’s Members conference. Looking at the numbers for 2008, Mr Hitchings said that in terms of total margin, 2008 was in the top tercile for the past 48 years, meaning that “if an upturn does occur, it would be one of the strangest in history”. He noted that a frequent argument put forward for a hardening market was that capital positions had deteriorated, but the deterioration was modest compared with the past, with insurers in the US and Europe generally displaying reasonably strong balance sheets.

The Australian arm of European insurer Allianz is underwriting a product that permits grain growers in parts of Australia to insure against too much or too little rain. Crop insurer Primacy Underwriting Agency is offering wheat growers in New South Wales the opportunity to take out the cover before a July 17 deadline. Sorghum growers in NSW and Queensland can also buy the insurance. Primacy managing director Steven Green said that the “water stress” cover was the first in the world for a non-subsidized market. He said that the product was the result of “cutting-edge” crop modelling. The complex indexing system is not just cover against drought or too much rain, said Mr Green. “It’s a risk management tool that allows growers to insure against yield loss when a crop doesn’t reach its potential, based on rigorous shire-based crop forecast models”, he said, noting that the product “takes into account rainfall in both pre-planting and during the crop growth phase”. In the event of a claim an agronomist will have to confirm a loss in yield because of too little or too much rainfall.