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As the UK economy continues to dive bomb towards recession the Bank of England has given its most blatant indication to date that interest rates will fall again in January. The indication was that...
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Friday 26th September 2008
News that Lloyds of London, the central insurance market for the worldwide industry, is set to report substantially reduced profits has put consumer groups and the industry as a whole on red alert. There are concerns that the rising cost of claims from recent hurricanes in the US to burst gas pipelines in Australasia will see claims and losses increase dramatically over the next 12 months. Will we see premiums increase to make up any shortfall?
As with any time in the past when insurance claims have increased and payouts ballooned, it will be the consumer who pays the price. While it may take a while to confirm the losses from the recent events – it has taken up to a decade for some losses to be quantified in the past – the financial strength of Lloyds of London is vital. It this requires a general increase in insurance premiums across the board then this will happen in a bid to replenish reserves.
When you consider that hurricane Ike alone caused up to £15 billion of damage it is not difficult to see how the profitability level of Lloyds of London can change overnight. It will be interesting to see if this threat to the profitability of the oldest insurance market in the world has any immediate impact on premiums. |
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