IUA: London well placed to ‘flatten’ cycle
Risk-based capital allocation models and better risk modelling techniques, together with improved underwriting discipline, have put the London market in a better position than ever before to counter the destabilising effects of the underwriting cycle, according to International Underwriting Association (IUA) chief executive Marie-Louise Rossi.
Speaking in front of a group of actuaries at the profession’s annual general insurance conference in Killarney, Ireland, Rossi said that future cycle swings should be less severe than in the past.
“Of course there will always be catastrophes that will affect the market and it would be impossible to eliminate completely fluctuations in premium prices through the cycle of hard and soft markets,” commented Rossi. “If someone is making money in a particular line of business, that will always attract other people wanting to take a share, thus increasing supply and affecting prices.
“But the IUA’s members tell me that they are pursuing profits as a priority over market share. Generally underwriters today are more technically adept at understanding the risks they are covering and are less likely to start chasing prices down into a loss-making situation. This is due to more discipline and an understanding of the need to make underwriting profit.”
Noting that the recent hard market conditions cannot last forever, Rossi highlighted the “strong commitment” among IUA members to hold firm on underwriting discipline.