Is the party over? After a decade of unbelievable growth, will the economy start to shrink? And should the insurance industry be worried?

The answers are complicated. The economy will undoubtedly be hit by the global economic downturn. It was already suffering before the events of September 11. Now that process is accelerating.

The international market for reinsurance is tough. Capacity is low and prices are sky high. The assets of insurers are subdued and so achieving adequate reserves is tricky, especially as motor and other liability payouts continue to soar.

On the bright side, as confidence drops, people will start thinking about their future and, instead of investing in property for the future, they may start thinking about pensions, life assurance and products such as critical illness cover more seriously.

For every threat, there is an opportunity. For those that are light on their feet and have their ears tuned acutely to the market, there are new clients to be won. For those relying on traditional markets, times will be tough.

Andy Cook