Energy Insurance Newsletter - October 2006 - JLT

7Recent QuotesThe following are ‘sound bites’ taken from speeches or articles by prominent market figures aboutthe insurance market and whilst we have tried not to take their words out of context they are not theentire speech or article and where appropriate may have been edited slightly.Rolf Tolle, Head of Lloyd’s Franchise PerformanceDirectorate at the Insurance Day Summit in London.“During a hard market, new opportunities emerge, capitalflows in to take advantage of those opportunities and profitssoar – it’s no wonder that many forget the good time won’tlast forever. It takes a dramatic event to remind us thatour underwriting practices need to be more prudent. Thisbehaviour has traditionally been accepted by the insurancecommunity, but as the risk environment changes, thefrequency of catastrophes are increasing and the costof taking on those risks is rising dramatically. Underwritingbehaviour must change if the industry is to survive.Capital will only be deployed if there is a realistic longtermpossibility of an acceptable return. Underwriters mustnot give in to the ‘bullying’ tactics of the playground – forexample, insufficient premium for the underlying exposure;requests to broaden coverage; softening of terms andconditions; and indeed, excessive costs and brokerage.Underwriting discipline must be maintained during all partsof the cycle.”Andrew Beazley, Chief Executive Officer ofBeazley Group plc.“People seem to think that hurricanes are new. Generationscome along and forget all about hurricanes and thinkthey hardly ever happen. They do. We are headingfor a bad season. A really bad hurricane could be northof USD 100bn. That’s what we are pricing for.”Stephen Lilienthal, CNA Financial Corp.Chairman and Chief Executive at the InternationalInsurance Society Risk Management Seminar“A USD 100 billion catastrophe in the United States maybe coming and the property/casualty industry should preparefor it. We believe a USD 100 billion catastrophic event ispossible. We’ve seen a steady increase in both man-madeand natural disasters. There have been 26 hurricaneswith winds of well over 100 mph, seven of them since2003. Those seven have caused more than USD 104 billionin catastrophe losses. The increase in man-made disasters,such as the World Trade Center collapse, was especiallytroubling because they defied prediction and wereuninsurable. Terrorism is a huge issue for us, our riskmanagement options against it are limited. Natural disastersare different. They are measurable. They can be handled bythe market.”Lord Levene, Lloyd’s Chairman in a speech toLloyd’s City Dinner, Merchant Taylors’ Hall, London7 September 2006“….It is also very refreshing to note the Chancellor ofthe Exchequer’s recent statement of the importance whichhe now attributes to the UK’s Financial Services Industry,and the measures which he is now considering to help thesector to be as competitive as possible.He has asked us in the Corporation, and no doubt someof you in the Market what needs to be done. You can restassured that we shall tell him. He has asked me to be amember of his Group which is looking at competitivenessin particular, and I can assure you that the question oftaxation is already an item of serious discussion betweenus. I certainly cannot promise what the result will be butwhat I can promise is that the case will be fully argued.”