Lloyd’s Chairman Addresses Norway’s Insurers

Lloyd’s Chairman, Lord Peter Levene, addressing a gathering of the Norwegian insurance industry, reminded his audience of the historic ties between the U.K. and the Scandinavian nation, observing that the two countries enjoyed a “a good business relationship.”

He also noted the long seafaring traditions of both nations, and the mutual support each has given the other over the years, particularly during the Second World War, when Norway was invaded and occupied by Nazi Germany.

Levene discussed Lloyds 1996 Reconstruction and Renewal initiative, marked by the formation of Equitas, a limited reinsurance company set up to handle all 1992 and prior liabilities. He also said that Lloyd’s had weathered the Sept. 11 attacks, its largest single loss event, and had adopted a franchise structure as part of ongoing initiatives to modernize the venerable institution.

He noted that “one of the key individuals leading the work is one who will be known to many of you. Before joining Lloyd’s Rolf Tolle, our Franchise Performance Director, held a number of senior positions with Scandinavian insurers, including as Managing Director of Norwegian insurer Polaris, and positions at Storebrand and Unipolaris. Clearly, given these Scandinavian credentials, we could not be in better hands!”

Discussing the changes in the marketplace, Levene observed: “Here in Scandinavia, it seems to me that those challenges are growing. In fact, you have told us so. There is now less choice for buyers and at Lloyd’s we have seen a surge in demand for specialist expertise recently. And it’s not just the big accounts, which have always tended to gravitate towards our market, but increasingly for smaller and medium sized risks where our expertise can equally be brought to bear.”

He also singled out “Three key challenges for our industry:” citing – contract certainty, as exemplified by the lengthy and costly lawsuit over recoveries from the destruction of the World Trade Center, the Spitzer investigations and the terrible toll wrought by natural catastrophes.

Many vacationers from the Nordic countries and the U.K. were victims of the tsunamis that struck the Indian Ocean at the end of December. That disaster along with the North American hurricanes and Asian typhoons “all add up to a likely bill for global insurance losses of around 50 billion dollars,” Levene stated. He also cited a recent Swiss Re report, which indicates that “insured losses have taken on a new dimension.”

Levene noted that the Baltic storms, which struck Scandinavia in January, were the most powerful to hit Europe since Martin and Lothar in 1999. “14 people died and in Sweden the loss to the timber industry could be up to 30 billion kroner [$4.43 billion],” he continued. “The surge in catastrophic events reminds us of the importance of pricing risk correctly. The critical role of insurance is to pay claims, to assist the process of rebuilding. But the industry can only do that if its balance sheet is strong.”

Topics Carriers Excess Surplus Lloyd's