With the difficulties in 2008's credit market providing the background, 2009 promises to be a challenging year for insurance underwriters. Interestingly, while the market will certainly be volatile, the work done in the last few years by some insurers will position them to leverage the current market conditions into significant market opportunity. While the current conditions imply a strategy of returning to core business capabilities and a flight to quality, some of these insurers are also viewing it as an opportunity to question their operating assumptions and look for new and creative business solutions. 2009 MARKET PRESSURES

With losses to surplus due to the financial market difficulties predicted to be in the 10% to 20% range for 2008, the rating agencies will be focused on financial stability, which translates to underwriters as a focus on underwriting profit, not on net profit. Insurers will need to demonstrate disciplined underwriting procedures in order to comply. More attention will be paid to catastrophe exposures, with both environmental and weather exposures as the focus for P&C and employee concentrations for workers' compensation. Enterprise risk management initiatives will concentrate on data accessibility and data quality in order to evaluate the relationships among risks. Organizations will be pressured to better respond to questions regarding the inter-relationships of risks identified from across the organization.

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