THE current hard market will last longer than in previous cycles as a result of falling stock markets and massive insurance losses, Swiss Re forecast.
The reinsurer's latest industry analysis concludes that the upturn in rates for insurance cover coincided with the end of the stock market boom which left insurers unable to depend on investment income.
It warned that investment returns could stay low for a "long period of time", coming on the heels of record industry losses in 2001.
The sigma study said the collapse in share values was the main factor behind the international non-life insurance industry losing about $90bn last year.
It said: "Similar or larger losses have to be expected for 2002 if the current state of stock markets continues."
Only about $30bn had flowed into industry coffers to replace it, leaving insurers needing rate increases to shore up their balance sheets.
