A new survey reveals 82% of underwriters back market reform but cycle management is still a huge challenge
Eighty-two percent of underwriters say there is a high level of commitment to reforming Lloyd’s market business processes, according to new research published today.
The findings, published in Lloyd’s fourth annual underwriting survey, come after 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.
Managing the insurance cycle remains the most important issue for the industry in 2008 with
93% of underwriters believing the industry is currently in a softening stage of the cycle (up from 78% in 2007). Significantly, over two thirds of underwriters believe more needs to be done to manage the underwriting cycle.
The majority of underwriters echo Lloyd’s decision to focus on liability as a key emerging risk in its 360 risk project in 2008, with 62% 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 seeing the instability of global financial markets as a significant factor to impact the insurance industry in 2008. Other key findings include:
• 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. 57% 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; and
• the top three sources of competitive advantage for the Lloyd’s market are seen to be its network of global licences; its strong financial position (and ratings); and a strong brand and reputation.
Rolf Tolle, Lloyd’s director of Franchise Performance said:“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.
“Encouragingly, at a time when Lloyd’s is focussing on market reform, the vast majority of underwriters remain completely committed to this process. Priorities for the industry in 2008 must be to continue to closely manage the cycle and push through reform in the market.”