Rate Hikes Needed, U.K. Regulator Says

London

Although recent sharp rate hikes are a concern to many commercial insurance buyers, some increases are needed to assure the long-term health of the industry and its clients, according to the U.K. insurance regulator, Howard Davies.

Increases in premium rates will help strengthen the industrys capital base, said Mr. Davies, chairman of the Financial Services Authority, during a meeting here of the Association of Insurance and Risk Managers, the London-based risk management group.

"However, given the sizable impact of these rises on the profitability of industrial and commercial customers in particular, the [insurance] industry will clearly need to be able to satisfy those customers that it is doing what it can to control its own costs," he said. "My suspicion is that this pressure on costs and the need to show stronger capital backing may drive further consolidation both domestically and internationally."

Mr. Davies noted that some commercial property premiums have risen by 50 percent across-the-board, and in many cases have doubled or more than doubled.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, February 4, 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

Contact Webmaster