The key challenges in a difficult economic climate

What will be the impact of the economic crisis on the insurance and reinsurance markets and how should they respond to this unprecedented challenge which, for the insurance and reinsurance companies themselves, includes reduncies, cutbacks and insolvencies? This was one of the questions addressed by Lord Levene, the chairman of Lloyd’s of London, in his speech to the Institute for Risk and Insurance Management at Ludwig-Maximilians-University in Munich earlier this month. According to Lord Levene, this is hardly the golden age of the insurance and reinsurance and that the main priorities for the industry over the next few years should be to get back “to basics”, to get regulation right and for companies to carefully negotiate the major challenge of the insurance market cycle. Here, in an edited extract from his speech, Lord Levene looks at how the wider risk environment is changing as recession takes hold. He outlines the three key risk challenges which, in his view, not only the insurance industry, but also business and society, need to respond to: corporate liability, climate change, terrorism and political instability