Natural disasters so far this year will cost the industry an estimated $16bn
Lloyd’s chief executive Richard Ward is warning that the insurance industry faces a “perfect storm” that could wipe out underwriting profits. Ward said a combination of low investment returns and low rates was putting pressure on insurers as they came into the tornado season in the USA.
Lloyd’s enjoyed record profits of £4bn last year during a quiet catastrophe season, but this year insurers have already taken huge losses from the Chile earthquake, Windstorm Xynthia and now the Transocean oil spill.
Ward said just one more major catastrophe could wipe out all of last year’s underwriting profits. “It isn’t overstating the situation to say that the insurance industry is facing a potential perfect storm this year,” Ward told a London audience on Tuesday. “Insurers that keep their discipline and don’t chase risky short-term profit will stand the best chance of long-term survival.”
Amlin has warned that it faces claims of up to $180m (£125m) from the Chilean earthquake and the oil spill in the Gulf of Mexico. The catastrophes that have taken place this year are expected to cost the worldwide insurance industry $16bn.