THE INSURANCE industry is obsessed with cats–as in catastrophes. Hurricane cats–especially “Kat-rina”–have raked insurers for billions of dollars in the last couple of years. Many reinsurers have become particularly allergic to this kind of cat and have withdrawn from its haunts as far as they can. The market appears to be edgy about other cats as well, including earthquake cats in California. Right now, it's cat season in the Gulf and on the Eastern Seaboard, and you can almost sense the industry holding its collective breath and hoping to ride out the next couple of months relatively unscathed.
For the E&S industry, cats present opportunity as well as risk. There is money to be made in Big Cat country by those who have capacity and the confidence to use it. And the freedom of rate and form that characterizes the E&S market theoretically should provide these players with the nimbleness they need to avoid a mauling. I recently spoke with several executives of E&S insurers to get their perspectives on the marketplace. While there was plenty of talk about cats, the executives also commented on a range of other issues.
Kevin Kelley, President
Lexington Insurance Co.
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