19 April, 2005 London — Lloyd’s underwriters believe that buyers are more concerned about pricing than current insurance industry investigations – according to new research released today.
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 world’s leading, specialist insurance market, the research was carried out among underwriters working at its London underwriting room. It provides a unique insight for the first time into how leading market participants view key issues in the industry.
The overwhelming majority of the market’s underwriters – 84 per cent – see pricing as the main issue on insurance buyers’ minds, with only four per cent saying it was issues raised by the investigations of New York Attorney General Eliot Spitzer.
And almost half of the underwriters questioned – 44 per cent – 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 per cent believe that China offers the most opportunity for business growth. However, the US – Lloyd’s biggest single market – was mentioned most in the underwriters’ top three. Almost 60 per cent 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 per cent thought that the insurance industry’s overall reputation with insureds was poor, with 61 per cent thinking it was good. 59 per cent 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.
Commenting on the research, Lloyd’s Director of Worldwide Markets, Julian James, said:
“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.
“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.”
The research – Annual Underwriter Opinion Survey 2005, was conducted and collated by independent research company Acritas on behalf of Lloyd’s. In total, 102 underwriters were questioned. The survey is available on the Lloyd’s web site (pdf, 250k)
Lloyd’s is the world’s leading specialist insurance market with a capacity to accept insurance premiums of more than £13.7 billion in 2005. It occupies sixth place in terms of global reinsurance premium income, and is the second largest surplus lines insurer in the US. In 2005, 62 syndicates are underwriting insurance at Lloyd’s, covering all classes of business from more than 200 countries and territories worldwide. Lloyd’s is regulated by the Financial Services Authority.
Lloyd’s web site: www.lloyds.com