The FSA has said it is to review insurance companies' use of catastrophe models to manage the risks posed by major disasters, such as terrorist attacks and natural catastrophes.

Speaking at the Acord forum, Julian Adams, head of wholesale insurance at the FSA, warned senior managers of the need to give proper consideration to what is input to the models.

He said: "We are keen to assess how far senior management understand what the models are designed to achieve and the other criteria - in addition to models - they use in assessing aggregate exposures."

The review will begin in February.

Adams' comments come as Lloyd's underwriters criticised the industry's reliance on catastrophe modelling.

Speaking at a conference on the impact of hurricanes, John Robinson, underwriter for Omega Syndicate 958, said: "The industry has had an obsession with catastrophe modelling in the past two years.

"Instead of using it as a guide it has become a gospel or bible."

Regulator pushes for more effective control of underwriting
The FSA has warned senior managers of insurance companies of the need to be aware of how their underwriters are pricing risk.

Julian Adams, head of wholesale insurance at the FSA, called on firms to use independent checks and monitoring "to ensure all controls operate effectively and that underwriting is consistent with declared board policy".

The warning follows a review by the FSA of a number of London market insurers' underwriting practices.

Commenting on the findings, Adams said: "We felt that in some cases the board itself could strengthen its own monitoring by demanding more informative management information.

"This would enable more effective challenge to executive management."