Jon Hancock, Director of Performance Management, Lloyd’s, said:

“The next major disaster is always just around the corner and it’s important that underwriters factor this into their calculations. In recent years we have seen the market eroding the catastrophe loading that it applies to rates in order to deliver more attractive prices for customers.

“This is an ongoing challenge for the market, particularly when capacity is so abundant and competition is so fierce. Harvey and Irma serve as another reminder that we need to maintain underwriting discipline, even in the face of such a competitive global market.”

Commenting on the overall impact of Harvey and Irma on the sector, Hancock added:

“At this point, we do not consider Harvey and Irma to be a Market Turning Event (MTE), the threshold for which is a series of losses amounting to over $200bn. However, the situation could change. We are evaluating all the latest information from the region and, as announced earlier this year, we have new measures in place to help the market deal with an MTE.

“Our focus is to give the market the support it needs to respond effectively and pay claims as quickly as possible, whilst preserving the stability of the market. We continue to stress how important it is for managing agents to have well tested contingency plans for an MTE in place and there is advice on the critical elements that should be considered within our guidance.”