Managing the insurance cycle remains the most
important challenge facing the global insurance industry, according to
Lloyd’s underwriters.
New research, carried out among more than 100
underwriters at the world’s leading, specialist insurance market, was
published today. It provides a unique insight into how leading market
participants view industry issues.
It reveals that more than half of Lloyd’s
underwriters believe that managing the ‘boom and bust’ nature of the
insurance cycle will be the best way to strengthen the industry’s
reputation.
But over two thirds said that the industry had
not made enough progress on the issue over the past year, and more needed to
be done to address it.
The findings follow two record hurricane
seasons, which are clearly also on underwriters’ minds. The research reveals
that nearly 90 per cent of underwriters believe that windstorm is likely to be
the biggest cause of loss to the industry in 2006.
The survey also highlights contract certainty
and increased transparency as key challenges the market must face in 2006. The
Financial Services Authority (FSA) has given the industry until the end of
2006 to ensure contract certainty.
Lloyd’s Director of Worldwide Markets, Julian
James said: “With two severe hurricane seasons behind us, these findings
underline the fact that the need for cycle management has never been more
crucial for insurers and re-insurers. Ensuring strong financial performance
remains a priority for Lloyd’s, and is a key part of our strategic plan.”
In last year’s survey, China was ranked as
the geographical area most likely to offer the most significant opportunities
for business growth, followed by the US. This year, the US has edged forward
slightly in importance, with 57% of underwriters listing it as having the most
significant growth opportunities in 2006, ahead of China with 56%. The growth
potential of India, Canada and the Middle East also increased from 2005 to
2006.
Pricing was again tipped to be at the forefront
of insurance buyers’ minds in 2006, but the availability of coverage and
financial security increased in importance this year.
Also, a third of respondents listed Lloyd’s
underwriters’ appetite for difficult and unusual risks as their strongest
source of competitive advantage, followed by the heritage of the Lloyd’s
brand and the market’s superior underwriting expertise. They also praised
Lloyd’s for its quick response to the 2005 hurricanes.
