According to Lloyd's fourth annual survey of underwriters, managing the insurance cycle tops the list of most important 2008 industry issues, while global financial market instability is the greatest emerging risk.

Last month Lloyd’s conducted its fourth annual underwriter survey of more than 130 underwriters in the Lloyd’s market. Underwriters were interviewed about their predictions and perceptions of the global insurance industry.

Managing the insurance cycle topped the list of the most important issues for the industry in 2008 – its importance increased from the 2007 survey. Other important factors include, among others, containing operating costs and improving efficiency, recruiting and developing talent, increasing competition, and increasing regulatory burden.

Only 19 percent of those interviewed believe sufficient progress was made in 2007 when it came to managing the cycle, while 93 percent say the industry is currently in a softening stage in the cycle.

Participants were also surveyed about their perceptions of emerging risks. They perceived the instability of global financial markets as the most significant of the emerging risks. Climate change, terrorism and political risk, corporate liability, and geographical opportunities were also important.

While almost a third of the underwriters said insurance buyers are considering climate change more when planning for risk management, more than half believe buyers need to do more to adapt to the impact of climate change. Fifty-five percent of respondents believe insurance buyers give more consideration today than they did in the past to terrorism and political risk and 62 percent believe buyers are giving more consideration to corporate liability, but more than half think more preparation is needed in both areas. China, according to the survey, offers the most opportunity for business growth in 2008 – India, the Middle East, the United States and Canada, and Latin America round out the top five.

Despite the fact that respondents think more work needs to be done in the industry, 55 percent think the industry’s reputation is positive, and 25 percent think the industry’s reputation is improving.

Complete results can be seen online.

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Source: Lloyd’s Underwriter Survey

© Copyright 2007, National Association of Mutual Insurance Companies (NAMIC).