Leslie-Ann Giovnilli previews this year's ARC Congress, which is following a thriller theme
Murder, mystery and mayhem! What else could be the theme of the 2004 ARC Discontinued Business Seminar and Commutation Congress? This year, the Association of Run-Off Companies (ARC) is exploring the darker side of run-off with a three-part theme considering the growth areas in our industry as well as the new potential involvements.Our exploration of the theme, and first stab at 'murder', started back in February, with an introductory talk considering 'Asbestos: home and away'. Australia, which already has a series of insurance 'deaths' to deal with (for example, GIO, HIH, New Cap Re and ReAC), is now looking at a huge increase in asbestos-related claims. How are the government and remaining insurers going to cope with this influx? Keith Rayment from Axiom, one of the Congress 2004 sponsors, explored this subject, aided by St Bartholomew's Hospital's Dr Jeremy Steele who explained about the effects of mesothelioma on individual sufferers.
Thematic conferenceThe first day of this year's full ARC Congress is a one-day seminar, which kicks off with a session extending the murder theme into 'getting away with it'. The session is entitled 'Can't pay won't pay', and is a broker and legal view of the payment process of claims. This will be followed by a panel discussion on asbestos in the US and RoW, tackling issues such as, how is the FAIR act progressing, what is the situation in Australia and how does Europe look? Speakers include Peter Taylor of Lovells, Paul Mansson of The Affiliated Alan Gray Cos and Axiom's Keith Rayment, who between them will cover the legal, actuarial and reinsurance aspects of the problem.The 'mystery' section considers Lloyd's run-off post Equitas and how life business may be 'the next big thing'. David Parmee and Nigel Rackham from PricewaterhouseCoopers, another Congress 2004 sponsor, are speaking on this topic, as well as David Stuart of the Financial Services Authority (FSA).Finally, 'mayhem'. This will look at commutations in the worldwide market, asking whether we should be looking at mass deals, with global scope and entire counterparty closure. This will be followed by a session trying to pin down run-off in Europe, asking whether the European sector is following the London lead - or, indeed, is it contained in London? Does London want to be the run-off centre for more than expertise? Is London the last choice of the discerning underwriter? Paul Bugden of Clyde & Co, a very active participant in the ARC Commutation Protocol, will be augmenting the 'mayhem' theme by speaking on the subject of commutations.
Extending the remitIn 2004, ARC is also looking to attract more live companies to the event, with the intention of broadening the number of counterparties involved in commutation discussions. With a very active London run-off market, the number of deals still to be completed between ARC members and other FSA-governed companies is diminishing, but problems faced by alien re/insurers could be a major barrier. There are considerations such as the Japanese 'loss of face' view, and whether US re/insurers, which may still face a huge number of asbestos-related claims, can afford to commute when there are still potentially large levels of recoveries to come from the London market. It seems London is leading the way with closure and finality but can only encourage other counterparties to commute if there is a real possibility that unless a deal is done soon then no cash - or a much reduced amount - will be paid. Perhaps the transparency of deals, such as suggested in the ARC Protocol, is still a necessary focus for reinsurers. Another alternative is the open-ended commutation, where a deal is done to a certain date and limit, but claims are monitored and if they exceed the expectations of both parties a new resolution can be discussed. As a solution, this is not so final, but it may be the only answer for some of the bigger and active counterparties.In March, the ARC Academy will be open for business, with the first run-off skills course ready for July. This two-day residential course will appeal to technical staff new to run-off and give them an insight into commutation preparation and how run-off can differ from the live sector.We are hopeful that this service, with input from a wide range of experts in the run-off field, will become a regular feature in the training year.- It is going to be a busy month and the ARC Executive look forward to seeing you on 16-17 March 2004 at Merchant Taylor's Hall, London EC2.For full details see http://www.arccongress.com.Leslie-Ann Giovnilli is the Secretary of the Association of Run-Off Companies and a partner in AMS (Reinsurance) Services Ltd.