Lloyd's warns of a lack of natural disasters

The Guardian ^ | 4/4/08 | Phillip Inman

[NormsRevenge]

Lloyd's of London warned yesterday that an absence last year of natural disasters or man-made accidents was putting pressure on firms to reduce premiums in 2008.

The world's oldest and biggest insurance market said that though the lack of major disasters had allowed firms to push up profits 5% in 2007, underwriting margins were being squeezed.

Almost half of the 320-year-old market's business was conducted in the US last year. It is a major insurer of the Florida seaboard and oil rigs in the gulf of Mexico. In 2005, a series of natural disasters culminated in Hurricane Katrina clattering into New Orleans. The clean-up bill pushed Lloyd's into a £103m loss.

However, two years of relatively few claims for environmental damage have increased competition in the sector. "On the back of a good performance in 2007 we need to sound a note of caution for 2008 because of softening market conditions and because of the financial turmoil we have seen," said Richard Ward, chief executive of Lloyd's.

"The indications are that people are being prudent in what they are doing by cutting back on writing business," he added.

Though the financial credit squeeze was unlikely to affect the market and the amount of business it was able to write, he said investment income, which makes up a large proportion of profits, could be hit. "Given that insurers derive much of their income from investments, it is a potential problem," Ward said.

--snip--

[goldstategop]

For crying out loud! This should be good news for insurance companies. So what with lower premiums - the trade off is they don't have to pay out billions in expensive claims.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[Harmless Teddy Bear]

Behind every silver lining is a dark cloud.

[goldstategop]

One would think the insurance industry lives for a dream like this - where they don't have to pay out a cent. Its all about avoiding risk.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[BenLurkin]

For a moment I thought this was from the Daily Redundancy.

[mimaw]

With any luck there will be a 12.2 in San Francisco and they won't have to lower premiums.

[COBOL2Java]

However, two years of relatively few claims for environmental damage have increased competition in the sector.

"Mr. Douglas, I'm here to tell you about 'Haney's Environmental Damage Insurance Fund!'"

[stevem]

I worked in the reinsurance business for more than a quarter of a century. It was my experience that such things operated in cycles. I’m sure catastrophes will make a comeback one of these days.