Mr. Bolt–who recently served as managing director of Marlborough Managing Agency, and whose appointment is subject to approval by the United Kingdom's Financial Services Authority–will be responsible for working with individual Lloyd's syndicates to improve the market's financial performance. This includes monitoring each syndicate's activity against its business plan, ensuring that underwriting guidelines are adhered to.

While it has been predicted that rates would be inching up in 2009, “the reality is, they're certainly not going down, but there's no massive, across-the-board rises,” Lord Levene noted. He warned, however, that “there is competition right now” putting pressure on rates. “I don't think that will change. But the market, as always, will find its own level.”

Jeremy Brazil, president of Markel International Insurance Company Ltd. and active underwriter for Markel Syndicate 3000, said a number of issues have impacted the market, including the ongoing U.S. credit crunch, the Bernard Madoff Ponzi scheme and other financial scandals, as well as Hurricanes Ike and Gustav.

“The first two quarters of last year were probably the largest incident of property risk losses in the world, so it's bad news going on, which will hopefully engender a change in the marketplace,” in terms of price increases, Mr. Brazil said.

Those that have a model that relies on investment income will struggle to make it work, he added, “you have to go back to what I would call good, old-fashioned gross underwriting.”

Shortages of capital and its cost, he noted, are forcing underwriters to make sure they get “the best bang for their buck, so to speak.”

Mr. Brazil said that after Hurricanes Ike and Gustav, “there was talk about what would happen” in terms of market impact. However, there was no infusion of capital, as there were after prior major events, such as the terrorist attacks of Sept. 11, 2001, which prompted start-ups in Bermuda. As a result, he said, in some classes of business, “it's a case of supply and demand.”

He observed that in lines like offshore energy and large property, rates–in particular for offshore energy risks–have gone up “dramatically.”

“The gulf risks coming up for renewal in May and by June 1 are already in London, because they're concerned about sufficient capacity and what pricing will be,” he noted.

At renewal they could see a stiffening of terms and conditions, as well as an increase in price of 25-to-50 percent in some cases, and even more on loss-impacted risks.

He added that these risks are being brought to market sooner because of concerns there may not be capacity later on. “Large-ticket property,” he said, especially those impacted in recent cats, can see rates up anywhere from 20-to-50 percent.

However, some middle-market coverages not impacted by the storms are still relatively flat. Admitted markets in the United States are “still pretty aggressive with that type of business. And if you're an [excess and surplus] market, you're going to lose out if someone has admitted paper,” he reported.

Rates for financial risks will be impacted by the subprime mortgage fallout–with prices typically going up 10-to-15 percent, he noted, while for directors and officers coverage, “we're seeing [rates up] 10-or-15 percent on anything that has a financial institutions flavour.” In the casualty arena, buyers can look to pay 10-to-50 percent more on certain lines.

He said that a Midwest U.S. risk with no cat exposure is probably being written by the admitted market–at flat or even reduced rates. By contrast, the sort of business that tends to seek the London market are larger, more capacity-driven risks, “and so pricing tends to swing quite dramatically, certainly after a loss.”

In general, Mr. Brazil said, “we are seeing more business in London. To be fair, Lloyd's is seeing a bit of a renaissance.”

That is because with AIG, XL and Swiss Re among those having problems following the financial crisis, “the perception of some of the large insurers and certainly true of the banks is that something you always thought of as a safe, solvent, financially strong company–people aren't so sure now.”

As a result, much more of the risk is being spread out among insurers. “That's really London and Lloyd's, in particular, strength,” he said. “They want to spread the risk and have a large number of people watching it.”

Lloyd's is good from a performance perspective, he said, and with the nature of Lloyd's and the chain of security in its Central Fund, “I think people feel much more comfortable that Lloyd's is a preferred market now. Lloyd's investment strategies insulated them against some of the problems in the [financial] markets.”

Will the buying habits of risk managers now shopping Lloyd's change? “There's always an ebb and flow,” he said, as the economic fallout of all that's occurred could take two-to-three years to unravel. Right now, however, “it's difficult for anyone to really know what will happen.”

Sumar Shankardass, executive vice president of WNS, a global business process outsourcing company, said from his office in the United Kingdom that “we're seeing insurers looking to dramatically change their fixed overhead and look at the way their products and services sell, and look at their low-performing and nonperforming assets and eliminate some of those costs.”

A year ago at this time, he noted, there were moves to look at outsourcing and other cost-reduction initiatives, but with the current state of the economy, “we're seeing a dramatic shift where there is an elimination of costs.” While this has meant some delays in outsourcing, “the things that are getting outsourced are more central functions, like finance and accounting that can't be readily eliminated.”

He also is seeing interest in areas that deal with revenue growth and protection, “because on the one hand they have to reduce costs, and on the other hand, because of the economic climate, they're selling fewer policies.”

How will this affect buyers? “The market will be higher,” he noted. “If you look at the personal lines, there's a trend toward increasing premiums, so there will be a harder market.” He also said insurers will need to change their ways of marketing products and services, “to the extent that people don't own assets anymore and therefore will not be renewing [policies].”

For corporate buyers, he said, “there's never been a better time to indemnify risk,” although the issue for some will be “having the means to pay for that cover.” He noted while there may be some market hardening, it will be closer to the end of 2009.

Speaking of Lloyd's significant recovery, Mr. Shankardass said he has also witnessed similar rebounds in past years. “I think the London market has an uncanny ability to recover and reinvent itself more than other markets,” he observed.

John Eltham, head of North American brokerage business with Miller Insurance Services Ltd. in London, said he sees the market beginning to tighten for several reasons. In view of the financial crisis, one factor is what the reinsurance market will do, which will impact underlying pricing.

Another factor is the rising combined ratios and the fact that surplus is beginning to disappear. “Lloyd's relative to U.S. carriers has fared better, mainly due to investments,” he explained. “The Lloyd's market had a far more conservative approach. Its investments have held up, so the capital base has held up.”

A third factor, he said, is falling investment income, due in part to the drop in interest rates, which means “that cushion, or additional income, has been dramatically reduced for a lot of carriers.”

The fourth factor is concerns about counterparty risk. Buyers are making decisions about whether to change the layering of a program or keep it as is “and begin to introduce some quota-share into it with some other carriers,” Mr. Eltham said.

Their decision, he added, leads them to the London market. A number of buyers, he said, are getting comfort from this approach as they and their boards take more interest in terms of their financial exposure.

“What we're seeing is definitely a trend in terms of more business coming back to London,” he said. “It may not be 100 percent orders, but part orders are coming back in on business that two or three years ago was just drifting out of the market–as it does on a cyclical basis.”

But what he sees happening is that more than cyclical business is coming back. “This is a conscious decision, certainly by the more sophisticated buyers, that spread of counterparty risk is beneficial.”

Mr. Eltham added this also is due to “the sophistication of risk management,” noting that over the last 10 years there has been a definite increase in understanding at the board level of what risk managers do, “and it is much more than purchasing insurance.”

Factors supporting this trend, he said, are the growth of enterprise risk management and Sarbanes-Oxley compliance demands. “I think the current financial environment also has raised awareness about D&O exposure–not just the purchase of D&O limits, but for the general responsibilities associated with good governance and best practice.”

All of those aspects have combined to raise the profile and voice of professional risk managers. “I think they are coming into their own,” he said. “And increasingly, terminology like chief risk officer is being used. That terminology in itself begins to suggest that risk management has more of a place in the C-suite.”

Another reason business is moving back to London now, he said, is its stability. “It's the old values, stability and continuity.”

In the past, London suffered from a poor reputation on documentation–particularly policy issuance and wording, as well as the amount of time to get a policy.

“London has been conscious of that and there have been various initiatives to get contract-certainty initiatives, which have really taken hold,” he said, noting that now it's the exception not to have wording agreed on prior to policy inception, as well as confirmation of coverage.

But all this hasn't changed the heart of the deal–the face-to-face negotiations. This is “all still happening and continues to be London's great strength,” he said, “but the supporting technology to make sure contract certainty takes place has taken huge strides.”

At renewal time, which he also noted is earlier–now June 1 because buyers are trying to get their property-driven coverages placed by hurricane season–Mr. Eltham said buyers can expect some firming, in pockets.

Which pockets are firming the most dramatically? “No surprises–the financial sector,” he said.

From a U.S. perspective, while regional banks are facing a challenging time in the U.S. market, “London is still reasonably receptive” to the D&O and financial lines.

Another example is the energy sector, particularly the U.S. Gulf, all-wind driven aggregates, he said.

Elsewhere, property rates are gradually rising. “And there are pockets–the non-cat is not moving much at all.” he said. Because underwriters are looking to get balance in their books, “there are still risks they are happy to compete over,” he added.

Stewart McCulloch, head of the U.K. Sector and U.K. Insurance with Xchanging in London–which has worked with the Lloyd's market and with London carriers to develop solutions for policy issuance, contract certainty and other issues–said his company continues to “support the London market's strive for modernization, in terms of continuing to prove how customers are serviced by the London market around their claims and accounting needs.”

He said Xchanging is working to make sure that “money flows faster, it's more electronic and efficient, and also helping claims processes move faster by using electronic means.”

He noted that reform, around claims and accounting, should help organizations manage their counterparty risks and capital more effectively, while gaining efficiencies and speed. “We'd like to think global markets will increasingly see London as an attractive place to trade,” he said.

Mr. McCulloch said that while some economic conditions are causing significant pressure on customers, “in Lloyd's in particular there is a good management of counterparty risk. So with the subscription market, the Central Fund and the transparency of the systems we run, you've got a very nice management of counterparty risks.”

He predicted that London will fare better than most markets. “But we're in significant adverse economic conditions,” he noted.

Overall, he said, certain classes will harden. “If the wind doesn't blow and we don't have a big hurricane season, some rates–say, in the offshore energy sector–will pull back. But generally, the trend would appear to be some hardening of rates.” He said his own customers are predicting some hardening for July 1 renewals and more so as the year progresses.

“The supply side is wanting to push rates up and the demand side is wanting to push them down, and we'll need to see how that plays out,” he said, “with the clarion call being underwriting discipline.”