Lloyd’s of London responds to troubling signs in insurance industry
Lloyd’s of London, one of the world’s largest insurance organizations, has been seeing troubling signs in the casualty and aviation sectors. The insurer, which provides coverage for just about everything, believes that premiums in these sectors are too low for insurance companies to be considered stable. Lloyd’s CEO Richard Ward recently appeared on Bloomberg Television, wherein he spoke about the premium problems and how they can be solved through the increase of insurance rates.
Insurer advises higher rates for companies in the casualty and aviation sectors
Profitability has been a problem which Lloyd’s of London and other European insurance companies have been struggling with. The ongoing European financial crisis has caused significant troubles for the insurance industry, which has been tapped to help address the issues created by the crisis. New regulations in Europe have hurt some sectors of the insurance industry. Lloyd’s of London suggests these sectors must raise rates by approximately 3% in order to see profitability. Ward also noted that insurers need to exercise more price discipline in order to be considered financially stable.
Lloyd’s returns to profitability
Lloyd’s of London recently returned to profitability in recent months following a modest rate increase in some of its business lines. Lloyd’s officials accredit the relatively natural disaster-free year as one of the contributing factors that helped the company return to its profitable status. Apart from a crippling drought in the U.S., powerful natural disasters have been somewhat rare in 2012, much more so than they were in 2011. In the first six months of 2012, Lloyd’s of London generated approximately $2 billion in pre-tax profits.
Insurers may be able to beat some problems by increasing rates
The European insurance industry is expected to continue see some turmoil as more regulations come from the European Union regarding the financial crisis. Lloyd’s expects that many insurance organizations will be able to weather the veritable storms coming their way in the form of these new regulations. They will have to adjust their rates accordingly, however, or risk running into issues concerning insolvency.