Lloyd's survey: Pricing is key issue
A new survey of Lloyd's underwriters suggests that pricing rather regulation comes top of insurance buyers' list of concerns - and that the big issue in 2005 for the industry a whole will be management of the pricing cycle.
The survey, which was commissioned by Lloyd's, and questioned 102 of the Corporation's underwriters, also found that they felt China has the biggest potential for growth in the insurance business.
An overwhelming majority of the market's underwriters questioned for the survey - 84 per cent - said they saw pricing as the main issue on insurance buyers' minds, with only four per cent saying issues raised by the investigations of New York attorney general Eliot Spitzer were of the highest priority.
Forty four percent of underwriters said they felt managing the cycle was the most important challenge for the industry, followed by the need to achieve contract certainty and then the need to achieve transparency and disclosure.
They were also asked what their top three geographical areas for potential growth in the industry were. Around 25 per cent said 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.
On the question of regulation, more than half of respondents said they felt regulators would be the group with the most powerful impact on the insurance industry in 2005, with an even split between those who thought their impact would be positive and those who thought it would be negative.
When asked which factors could do most to strengthen the industry's reputation, underwriters pointed to a desire for increased transparency and disclosure and better communication with those outside the industry.
Lloyd's director of Worldwide Markets, Julian James, observed: "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."