PricewaterhouseCoopers' latest annual survey on the London market reveals widespread confidence that returns will be positive in 2006.
However, the risk environment is causing concern, with many respondents expressing disquiet over reinsurance capacity and rates, as well as catastrophe and aggregation models.
The survey also listed the most important management challenges, including achieving comparable underwriting performance to prior years, institutionalising effective cycle management, embedding capital and risk management into the day-to-day running of the business, and improving management information.
Paul Delbridge, partner, PWC LLP, said: “Concerns have been raised around the quality of the underlying data, potential leakages in the capture of exposures, the lack of consistency between different classes of business and the use of models that primarily rely on relatively limited past experience as a guide to the future. Although organisations appear prepared to take decisive action to limit the impact of a cycle downturn, the absence of adequate pricing controls and monitoring could lead to a damaging disconnect between intention and execution."
