'Tougher times' predicted by Lloyd's

08/04/2008

Lloyd's of London has warned that the credit crunch is likely to have a hardening effect on the UK insurance market.

Unhappy investors are expected to have an impact on professional indemnity (PI) and directors' and officers' (D&O) insurance premiums, reports The Independent.

Claims from investors who have lost money following the crisis could see premiums rise, the publication suggests, despite the fact that the US sub-prime lending difficulties have shown little effect on the insurance market's profits.

The news comes as Lloyd's of London announces record profits for 2007, up by 5.2 per cent before tax.

Meanwhile, The Times reports that Lloyd's of London chief executive Richard Ward rates the credit crunch "seven or eight on the financial earthquake Richter scale".

While Lloyd's of London is described as "well shielded" in the article, a likely increase in claims relating to sub-prime lending is also predicted.

"Premiums for D&O liability cover are already rising ahead of the expected flood of lawsuits," the publication's business commentator David Wighton notes.

Neil Pointon of PYV added: "Over the last 4 years, PI rates have been getting softer and the coverage wider. Right now, we are yet to see this change for most lines of PI other than Mortgage Intermediaries where the spectre of a housing crash has generated fears of increased claims, and premiums and conditions have started to harden."

PYV are one of the UK's leading providers of professional indemnity insurance. This news article has been produced by Adfero in collaboration with PYV and its unauthorised use is not permitted.

(c) 2008 Adfero Ltd.

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