Lord Levene has outlined his view of challenges facing the insurance industry in the US during a speech to the New York RIMS conference. He said the US had changed from a "can-do" culture to a "can-sue" one.
He said: "The US has to reform its tort system, as it is eroding the spirit of enterprise, innovation and risk-taking that lies at the heart of American culture. I always thought of Americans as go-getting. Their approach to life, I believed, was `can-do'. For many, it's now `can-sue'."
Levene added that the US tort system at its current level was the equivalent of a 5% tax on wages.
He said the other main challenges facing the market were the threat of terrorism, natural disasters.
The insurance market did not properly cover the threat of disruption to online business through terrorism. Levene predicted that policies written for cyber insurance were likely to reach US$2 or $3 billion over the next five years as business recognised this gap in cover.
Levene also said the number of natural disasters was increasing, and that it was the responsibility of the insurance industry to adapt to this change.
"It is our responsibility to be able to cover the cost of such catastrophes, and help our policyholders if the winds roar or the earth quakes."
As a result of these challenges to the industry, Levene said it was likely that premiums would have to rise.
