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Complex Global Risks, Boardroom Demands to Challenge Risk Managers in 2010: Marsh

Marsh's report, Competition Nets Rewards - Multinational Client Service Insurance Market Report 2010, finds that while business opportunity appears to be brightening in 2010, the financial crisis has brought risk management to the fore within and beyond finance and treasury departments. Global risk managers are challenged by new boardroom demands of insurer security, balance sheet transparency, and heightened accountability.

"With the ever-increasing complexity of global exposures, successful risk management today depends on timely information, regulatory awareness, and thoughtful anticipation of the range of local and global scenarios," said Hank Allen, President, Marsh Multinational Client Service. "For global risk managers, the extent of their visibility-extended to the highest levels of their organizations—is the new world of financial risk and accountability."

Marsh's report indicates the continuation of stable market conditions in 2010, as illustrated by regional trends:

• Intense competition among insurers, increased capacity, and fewer insured catastrophe losses kept U.S. insurance markets generally stable in 2009. Barring a large catastrophic event, property insurance markets will likely continue to stabilize and premium rates will moderate in 2010.
• Clients across Europe, the Middle East and Africa were able to secure premium rate reductions for most classes of business in the second half of 2009, but there is evidence of rising loss ratios in many lines of business-which could prompt carriers to review pricing. Local markets are generally expected to stabilize over the course of 2010.
• Despite large natural catastrophe losses in Pakistan, the Philippines and Indonesia, Marsh expects most Asian markets to remain soft throughout 2010.
• Stability in Latin America and the Caribbean is expected to continue, and insurers appear well-positioned to provide solutions to emerging exposures, though significant concerns remain: natural catastrophes, volatile political and economic environments, safety concerns linked to drug cartels, and dependence on international markets for large and complex risks.
• With no signs of a change until the end of 2010 or possibly into 2011, Canada's market remains soft.
• Marsh expects buyers to continue enjoying relatively favorable market conditions in Australia.

Marsh's report further indicates a need to monitor global insurance and tax regulations, which are being enforced more vigorously than in the past. In the European Union, Canada and elsewhere, tax authorities have begun to challenge multinational companies' insurance programs with a view to assessing and collecting unpaid premium-related taxes-a trend that is likely to escalate.

Risk managers should also monitor several local trends highlighted in Marsh's report:

• New regulations in the EU, such as the new Environmental Liability Directive, have impacted rates in environmental insurance, employers' liability/workers' compensation, and other lines of insurance.
• Many carriers in Latin America and the Caribbean are looking to diversify away from concentrations of large industrial property risks towards personal lines and consumer business. The earthquakes in Haiti and Chile may cause local rates to increase, and policy texts and definitions may be amended.
• Brazil appears to be a strong growth target for insurers, owing to its large economy and domestic consumer market. Opportunities are particularly strong in personal lines, life, and health, as consumers become more conscientious about their insurance choices.
• In China, a greater focus on underwriting profit has led to a reduction in capacity among local insurers for property and construction insurance. New regulations have further enhanced the rights of consumers, clarifying the rights and obligations of parties in an insurance contract.
• Rates in the Indian market appear to have bottomed out and local clients are now facing some premium increases, particularly those with unfavorable risk profiles. Marsh anticipates that the market will continue to harden over the course of 2010.

Hank Allen, President, Marsh Multinational Client Service, and other global experts will host a conference call to review the highlights of the Insurance Market Report and answer client questions on May 25, 2010, at 11:00 am EST.

To launch the report in an electronic flip book, please visit: http://www.insurancemarketreport.com/Portals/120/mcs_imr_final/index.html

To register for this event, please visit: www.insurancemarketreport.com/IMRcall

About Marsh

Marsh Inc. has over 23,000 employees and provides advice and transactional capabilities to clients in over 100 countries. Marsh's Web Site is www.marsh.com. Marsh is a unit of Marsh & McLennan Companies (MMC), a global professional services firm with approximately 52,000 employees and annual revenue exceeding $10 billion. MMC also is the parent company of Guy Carpenter, the risk and reinsurance specialist; Kroll, the risk consulting firm; Mercer, the provider of HR and related financial advice and services; and Oliver Wyman, the management consultancy. MMC's stock (ticker symbol: MMC) is listed on the New York, Chicago and London stock exchanges. MMC's Web Site is www.mmc.com.

Marsh Inc.
Anand Poola, +1-212-345-4292
anand.poola@marsh.com