Bermuda start-ups blamed for forcing premiums down

Prices for some classes of business at Lloyd's have fallen despite predictions that the hard cycle would persist all year.

Commentators said the market was seeing the effects of price competition from Bermuda, where start-up insurers have lower overheads.

Prices have come down for cover on international property risks, following particularly intense competition.

James Truscott, chief executive of Lloyd's operator Euclidian, said: "There has been a marginal reduction, but what's notable is that it has reduced at all."

James Geffan, managing director of reinsurance at Lloyd's broker Miller, said: "Property is flattening; growth is slowing down." But he dismissed the idea that other classes of business would see similar falls. "It's not particularly serious."

Charles Philipps, chief executive of Amlin, the largest direct capital provider at Lloyd's with corporate member capacity of £861m for 2003, said he was aware of price reductions across the market, but said pricing for individual risks could still show growth.

"Our property is ahead of where it was last year, but this is contrary to my expectation and what I've heard elsewhere, so we will be looking at it."

Classes such as casualty and direct marine risks were still showing growth, he said.

Earlier this month, Insurance Times reported warnings that some aviation risks were falling in price.

Philipps said heavy investment from players such as Berkshire Hathaway had cut average prices for property catastrophe and aviation risks, but the market was seeing a return to the existence of significant price differences between underwriters.

"The fact that Berkshire is in the market, in the way that it is, could be beneficial for the market. I suspect that as an underwriter it is quite disciplined. That means it will have an eye on when it's turning too far south and, given its position in the market, it will probably do what we do - say thank you very much, but enough is enough."