Lloyd’s underwriters believe that buyers are more concerned about pricing than current insurance industry investigations – according to new research released Tuesday.
The research* also reveals that underwriters see managing the cycle as the most important industry issue in 2005, and China as the biggest area for potential growth in the insurance business.
Commissioned by Lloyd’s, the research was carried out among underwriters working at its London underwriting room. It provides insight into how leading market participants view key issues in the industry.
The overwhelming majority of the market’s underwriters – 84 percent – see pricing as the main issue on insurance buyers’ minds, with only four percent saying it was issues raised by the investigations of New York Attorney General Eliot Spitzer.
And almost half of the underwriters questioned – 44 percent – believe that managing the cycle is the most important challenge for the industry. Achieving contract certainty was the next most important issue, followed by the need to achieve transparency and disclosure.
Underwriters were asked to rank their top three geographical areas for potential growth in the industry.
Around 25 percent believe that China offers the most opportunity for business growth. However, the U.S. – Lloyd’s biggest single market – was mentioned most in the underwriters’ top three. Almost 60 percent of respondents believe China to be the market offering the most new specialist insurance opportunity over the next five years.
Other key findings include:
* More than half of those questioned believe that regulators will be the group with the most powerful impact on the insurance industry in 2005. There was an almost even split in views about whether the impact would be positive or negative;
* 32 percent thought that the insurance industry’s overall reputation with insureds was poor, with 61 percent thinking it was good. 59 percent thought that the industry’s overall reputation had stayed the same in the past year; and
* Underwriters believe that increased transparency and disclosure and better communication with those outside the industry were the factors that could do most to strengthen the industry’s reputation.
“Lloyd’s has arguably the greatest concentration of underwriting talent and expertise in the world. Their views matter. Given Lloyd’s emphasis on the discipline needed to deliver an underwriting profit, it is reassuring that underwriters in the market see managing the cycle as the single most important issue for the industry,” said Julian James, Lloyd’s director of Worldwide Markets.
“The fact that underwriters at Lloyd’s pinpoint China as having the greatest growth potential demonstrates why Lloyd’s is putting so much time and effort into securing an on-shore reinsurance licence there,” he said.
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