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Lloyd's of London Warns of "Perfect Storm" for Insurance

Richard Ward, the head of the Lloyd's of London insurance market, said that the insurance industry is facing the toughest year he can recall. The...
June 26, 2010

Richard Ward, the head of the Lloyd's of London insurance market, said that the insurance industry is facing the toughest year he can recall. The remarks were intended for the Insurance Day London Summit, held on May 18. Ward said that in the wake of the Gulf of Mexico oil spill, the insurance market is only one major disaster away from slipping into the red.

According to reports the cost of the Gulf oil spill could be up to $3.5 billion. In 2009 Lloyd's posted record profits of over $3 billion. Amlin, the largest group in Lloyd's, and others have said that the Gulf oil rig disaster will cause premiums to rise, with much of the losses being paid by reinsurance companies.

Ward called on insurers to follow a "strict diet of underwriting discipline" to ensure they survive the crisis with their balance sheets intact. He urges them not to be lured into writing risky business in the hunt for short-term profit; to underwrite for profit, not volume; and to focus on where they will be in five years' time, not one.

"During the financial crisis the insurance industry has performed very well, without the need to fall back on either government or taxpayer support," said Ward. "We've helped protect the economy during the crisis. Now it's time to protect ourselves."

Lloyd's Warns of Threat to Insurance Market (Guardian UK 5/18/10)

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