London market insurers are broadly confident that they are now better placed than at previous points in the cycle to manage the downturn in premium rates, according to research by PricewaterhouseCoopers.
This confidence comes despite insurers being under pressure to maintain similar levels of returns to those in 2004 while facing the key risk of mismanagement of aggregations of exposure, for example to US hurricanes and other catastrophes.
At the same time, they are dealing with industry changes on distribution, including broker remuneration,
PricewaterhouseCoopers' fourth annual survey on the key issues affecting the London insurance market revealed that achieving comparable underwriting performance to 2004 and institutionalising effective cycle management was cited as the single most important issue on chief executives' agenda.
Philip Calnan, partner at PricewaterhouseCoopers, said: “The industry has had to brace itself for some of the most far-reaching changes in the market's history over the last few years including implementing a more structured approach to underwriting, driven by corporate capital providers, as well as adapting to some key regulatory reforms.
“These changes have occurred so far within a relatively strong market underpinned by strong premium rates, so the acid test is, now that the market is softening will these changes help sustain profitability or will the market repeat the mistakes of the past.”