The insurance industry has been forced to cut the amount of new business it underwrites in a bid to cover a $180bn (£111bn) "black hole". That was the stark warning from Aon UK chief executive Dennis Mahoney earlier this week.

Mahoney said the industry was increasingly unable to underwrite large risks.

"It's starting to get really ugly, yet the problems of the past show no signs of abating. It's a pretty gloomy picture," he said.

Mahoney added that such a "retreat from risk" could threaten to undermine the industry, since its function is to assume liabilities.

Mahoney blamed the fall in the industry's financial strength. "This is different from any previous cycle we've seen. We would argue the situation is more serious than people have perceived it to be so far," he said.

"Where historically prices have gone up, because claims have exceeded premiums, now the problem is just as bad on the asset side of the balance sheet. Insurers have seen a massive depletion of their assets."