International

Buyers braced for uncertainty: Lockton

Property and casualty insurers face a number of challenges in 2009, according to broker Lockton in its most recent market update. On the bright side, premium rates are expected to harden next year. Lockton says the repercussions from the big hurricane losses and the melt-down in the financial markets are just beginning to be felt in the property insurance market. The broker cautions buyers to prepare themselves for a period of uncertainty and volatility. While the energy insurance market, offshore and onshore, continues in a soft phase, Lockton says there are signs of rating levels flattening out. Other indicators point towards the first signs of a tightening market in specific areas of the energy market. However, the challenges are clear. Lockton points out that in the first half of 2008 insurer profits declined 57.0%, the industry posted its worst first-half year underwriting performance since 2002, investment returns declined by 18.0% and net written premiums for the industry as a whole were stagnant. Catastrophe losses were also double the average of the past decade. Touching on the D&O market, Lockton notes that continued volatility in the financial markets could mean that litigation levels will continue to rise. Even though the D&O market has been soft for most buyers.