The cycle challenge
12 July 2007
Lloyd’s has made great progress on managing the insurance cycle but “the job isn’t done yet”, according to Rolf Tolle, Lloyd’s Franchise Performance Director.
Speaking at the Chartered Insurance Institute’s Underwriting and Distribution conference in London, Tolle said that mitigating the insurance cycle was the “biggest challenge” facing managing agents in the next few years.
The market, he predicted, is expected to remain soft throughout 2008 providing good enough reason for managing agents to “disengage” with certain lines.
“I would be surprised to see growth going forward,” he noted. “Having said that, if the market turns we should be ready to grow much more quickly and reserve more capital to deploy later in the cycle.”
Tolle said that there was more risk involved for the insurance market when predicting cycle patterns because of the unpredictability of the risks it deals with.
But he added: “There is nothing complex about the cycle. It is about having the courage of your convictions to act with strength.”
In an ideal world, “all classes of business would be profitable” and managing agents would be “exceeding the minimum standards on all claims”, Tolle said. He added that there should be less dependency on a small selection of risk management agencies, because “that makes it too much of a risk”, and surplus capital should not dictate underwriting levels.
Tolle said it was Lloyd’s policy to help managing agents achieve the goals set by the market for the benefit of the market. “As an industry we should work together towards an improvement in process,” he said.
Last updated on 09 Aug 2007
