Environmental risk and insurance

11

2750

The main cause of the rise in the insurance policies is the changing climatic conditions and also capital management problems. It is also being speculated that the cause for the increase in the pricing according to the underwriters is the increased risk of litigation and also risk management. These conditions and many others put the insurance agencies in edges and hence have to increase their pricing to keep their businesses afloat. The recent years have seen significant losses not only sustained but also paid for in many cases that rose from the harsh climatic conditions. It has also been noted that extremely hard rates in catastrophe classes coincided with a very heavy loss experience. This shows that performance is attributable to events both inside and outside their control, and also the inherent levels of business risk in reinsurance (Donald, 193). As a regulator, we are keen to see this properly controlled. The aftermath of some of these catastrophic and risk management has really attributed to the significant losses in the insurance firms. There has been a reported decrease in the financing of premiums as different primary insurance companies are facing financial pressures. It is true that the capital bases of many companies have been put into major test given the fact that they are not allowed to come up the financing of the benefits themselves (Donald, 195). What most of the people in this sector are doing is buy-downs and reinsurance mechanisms to keep their companies afloat.