Lloyd's this week pledged to improve the accuracy of its forecasting on the back of news that its loss forecast for the 1998 underwriting year had rocketed by 67% to £725m,
Following the hike, the 300-year-old market announced the appointment of Douglas Morton to a new role of chief independent analyst
Until now, Lloyd's has used the forecasts received from the managing agents of syndicates to create its forecasts.
But in his new role, chief analyst Morton will independently check the forecasts of syndicates underwriting at Lloyd's.
If he believes managing agents' forecasts are unrealistically optimistic, he will report them to Lloyd's regulatory regime.
Syndicates could then be forced to put up extra capital with the ultimate threat of expulsion from the market if they fail to do so.
For the 1998 underwriting year, the biggest loss-making sector for Lloyd's was non-marine. Worldwide insurance losses from natural catastrophes and man-made disasters amounted to $10.9bn, which contributed to an expected £272m loss for 1998.
Lloyd's chairman Max Taylor said: "There are signs that rates appear to be bumping along the bottom of the cycle and in some classes bouncing higher."
After non-marine, motor is forecasted to produce the next biggest loss (£153m). But Taylor said he believed the market was showing signs of recovering.
He said: "Motor, a sector responsible for a very large proportion of the 1997 losses, has seen significant premium increases in the last six months. 1998 and 1999 appear to mark the bottom of an extremely severe loss cycle for the insurance industry."
Marine with a loss projection of £124m, and Aviation (£76m) complete the bleak picture for Lloyd's.
However, Taylor remained bullish about the future. He said: "Our confidence in the market's future performance remains strong."
