Lloyd’s of London has published its fourth annual underwriting survey, which reveals that “managing the insurance cycle” remains the most important issue for the industry in 2008 with 93 percent of underwriters believing the industry is currently in a softening stage of the cycle (up from 78 percent in 2007).
More than two-thirds of the underwriters Lloyd’s surveyed believe more needs to be done to manage the underwriting cycle.
Lloyd’s also found significant support for further market process reforms. Updated figures from the Market Reform Group (MRG), released last month, showed the London market had made “significant progress” in meeting its goal of reforming business processes, said the bulletin. Eighty-two percent of underwriters agree there is a “high level of commitment to reforming Lloyd’s market business processes.”
In addition, Lloyd’s said a majority of its underwriters echo the decision to focus on liability as a key emerging risk in its 360 risk project in 2008, with 62 percent believing insurance buyers need to do more to prepare for the impact of liability risk on their business.
The global economy is also top of mind with Lloyd’s underwriters who see the “instability of global financial markets as a significant factor to impact the insurance industry in 2008.”
Other key findings included:
- Almost a third of underwriters believe insurance buyers are giving more consideration to climate change and over half of buyers are giving greater consideration to terrorism and political risk. Fifty-seven percent of underwriters believe more needs to be done to prepare for the impact of climate change.
- China is seen to offer the most significant opportunities for specialist insurance growth during 2008, followed by India and the Middle East.
- The top three sources of competitive advantage for the Lloyd’s market are seen to be its network of global licenses; its strong financial position; and its strong brand and reputation.
Rolf Tolle, Lloyd’s director of Franchise Performance, said the market is reflecting the attitudes unveiled in the survey.
“The global economy and managing the cycle are foremost in underwriters’ minds as we start 2008, and we are currently seeing a number of them pulling back on their underwriting in the face of current market conditions,” the Lloyd’s director commented.
Tolle said the industry must continue to closely manage the cycle and push through reform in the market.
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