Kansas City, Mo. & London — Global insurance broker
The 2008 Lockton Market Update reports that insurance carriers face an ominous set of facts entering the final weeks of 2008. While it is not clear that prices will harden immediately, pressures are looming in the property/casualty insurance market.
"In the first half of 2008, insurer profits declined 57%, the industry posted its worst first-half year underwriting performance since 2002—investment returns declined by 18% and net written premiums for the industry as a whole were stagnant," the report says. "Catastrophe losses were double the average of the past decade."
Property, casualty, executive risks, aviation, energy, construction, real estate, employee benefits and other insurance and reinsurance markets, including Lloyd's, are covered in the report. In addition, Lockton shares insights on potential technology liabilities and identity theft as well as the new corporate manslaughter and homicide act in the UK.
Highlights include:
-- Executive Risks: Rodger Laurite, Lockton SVP in Atlanta, notes that securities lawsuits are on the rise again. "Continued volatility in the financial markets could mean that litigation levels will continue to rise," he writes. "Even though the D&O market has been soft for most buyers, we recommend that clients use this time to prepare for their upcoming renewals. It is important that clients take steps to differentiate themselves so that they avoid being lumped in unfairly with their peers."
-- Energy: "The energy insurance market, offshore and onshore, continues in a soft phase, although there are signs that rating levels are flattening out," writes Peter Leahy, Lockton managing director of global risks in London. "Other indicators point towards the first signs of a tightening market in specific areas."
-- Property: "The repercussions from the big hurricane losses and the meltdown in the financial markets are just beginning to be felt in the property insurance market," says Jim Rubel, Lockton EVP in New York. "Insurance buyers should prepare themselves for a period of uncertainty and volatility in the property insurance market."
Sources: Lockton Cos. LLC, Business Wire
