LLOYD’S of London chief executive Richard Ward yesterday said that insurance premiums must rise, on the same day that the market announced profits of £1.53bn for the first six months of 2012.
“Rates do need to go up broadly across the insurance sector,” he told City A.M.. “Outside catastrophe-exposed classes premiums have been moving sideways.”
“It’s challenging for clients when you make a profit but we operate over a seven year cycle. Last year we paid out £13bn in claims.”
The results – which measure the combined performance of the market’s 88 syndicates – compare with a £697m loss for the first half of 2011, when Lloyd’s was left with a £3bn catastrophe bill following earthquakes in New Zealand and Japan, as well as tornadoes in the US.
For the same period this year total catastrophe claims were around £300m, mainly relating to the stricken cruise ship Cruise Concordia.
Meanwhile Ward swatted aside calls to delay the implementation of new EU rules on capital requirements – known as Solvency II – and said the “sooner it gets in, the better”. “Lots of us are uncomfortable with bureaucracy, the role of local regulators and how excitable they’re getting over implementing Solvency II but we need to get past that. We’ve been using our risk governance model for the last two years and we’re going to use it more – all we need to do is make sure that the FSA is comfortable.”
“We’ve done the heavy lifting and are now seeing a reduction in our regulatory spend. Our competitors on the continent are still faced with that hill to climb.”