The UK insurance market is going through a more unsteady situation lately due to a modest reduction in capacity this year created by increasing concerns about falling prices for insurance and reinsurance in many areas of the market. The maximum volume of insurance premiums the market can accept in a single year, based on the amount of its capital backing, would be £15.95bn ($31.64bn) this year, while in 2007 was a record of £16.1bn. It is the first time that capacity has fallen since 2005; however it is less than some analysts had forecasted. Lloyd's cautioned on Monday Lloyd's against reckless underwriting amid getting worse market conditions. An increase in capacity, or an insufficient reduction at this point in the cycle, could unease the market, according to some analysts. The key issue is how much of the capacity is actually used, because Lloyd's says it is an indication of how much business its insurers could write and Chris Hitchings, an analyst at Keefe, Bruyette & Woods reveals that a significant amount of capacity had come into the Lloyd's market during 2007. If there would be a comparison of the situation at the end of 2007 with that at the beginning of 2008, the result would show a decrease. Because of rivalry with others insurance markets such as Bermuda and Dublin, with friendlier tax regimes and a lighter regulatory touch, Lloyd's finds in a delicate situation and has to prepare better, especially due to the small number of claims under directors' and officers' policies, relating to the crisis in the US subprime mortgage market that it had received. The entire global insurance and reinsurance market is expected to receive as much as $4bn-$5bn claims as a result of the subprime crisis, said analysts at Clear Capital. What will happen next and what can you do as a possible claimer is to search and see. Enjoy!
By Claudia Sonea; edited by Dana Kotorova
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