So Far, So Good

As I was saying, before I was so rudely interrupted…

Last time, we draped our cover and opening prose in funeral black crepe proclaiming 2001 “The Worst Year Ever”, the property and casualty business having just reported its first-ever annual net loss.

Now, abruptly, the fickle finger of fate points to at least the hint of a turn-around. The rebound, if it is one, is sudden to be sure, and should probably be winked at for the moment as more apparent than real. After all, there’s a whole lot of 2002 stretching out before us still and much mischief can yet befall the business. Hurricanes may blow and droughts crack the arid earth. Other Enrons and Andersens may lurk beyond the horizon. And, perish the thought, but not to be discounted, another 9/11.

But, so far so good. So let’s not rain on this parade just yet. Let’s enjoy the moment and pray the good news goes on. IJ’s Charlie Boyle spins that tale beginning on page 20 of this week’s issue.

The financial news isn’t the only thing that turned around since last we spoke. Last week brought the equally welcome news that a joint Congressional committee has finally endorsed the notion of a federal role in providing terrorism backup insurance. A limited one, to be sure, but a role nonetheless.

“It is difficult (or impossible) for private firms to accurately price or calculate the new risks of terrorism and private insurers may not be able to absorb additional catastrophic losses from terrorism attacks,” said the Congressional Joint Economic Committee, adding that lack of insurance would mean “significant” costs and consequences to the economy.

Amen to that, though why this self-evident piece of wisdom took so long to penetrate is beyond us.

The committee calls for “a temporary and limited backstop” for terrorist insurance possibly involving a government risk-sharing program. The panel says the government should “facilitate insurance for terrorism, albeit as much as possible from the private sector”, with government programs encouraging “participation by private insurance providers.”

Amen to that too. The industry has asked no more. It’s heartening that someone has finally pulled the light chain on this issue under the Capitol dome.

As if this weren’t enough, along comes the almost stupefying news last week that a succession plan, of sorts, has been put in place at American International Group for that unimaginable day when the indomitable, now 78-year-old Maurice “Hank” Greenberg stands aside. It’s an overdue move, made necessary all the more when this erstwhile King Lear was unable to divide the AIG kingdom among his heirs, who fled elsewhere. What’s now presented is a crowded field of pretenders to the throne. Ten, in fact, at last count. Of course, it may take that many to fill one of his shoes.

Until next time…

Topics Catastrophe