NICK PRETTEJOHN, chief executive of Lloyd’s of London, will today give warning that his insurance market has the highest operating costs in the global industry, which have led its members to make poor underwriting decisions and suffer higher levels of claims, The Times has learnt.
His comments come as Lloyd’s insurers brace themselves for losses from Hurricane Isabel, which is expected to hit the eastern seaboard of the United States this evening.
In a speech to the Chartered Insurance Institute’s (CII) annual conference, Mr Prettejohn will blame complacency and irresponsibility of insurers for the unnecessarily high operating costs of Lloyd’s companies and syndicates.
He is angry that Lloyd’s members have sluggish business practices, which hold up new business and lead to slow cashflow. He is also concerned that the Lloyd’s market spends more than £500 million a year on lawyers and consultants, further increasing costs and delaying settlement of claims.
He is expected to say that the systemic inefficiency, driven by an over-reliance on paper and labyrinthine processes, is continuing to cost the market about £300 million, with little changed since a 1995 study identified the problem.
Mr Prettejohn will tell the insurance industry today that the market wants to scrap paper-processing for trading insurance contracts, and to introduce more technology.
Meanwhile, his members will be bracing themselves for Hurricane Isabel, which is expected to cost the insurance industry $3 billion (£1.9 billion) in claims.
Lloyd’s insurers are among the few players reinsuring US property risks. While Lloyd’s insisted yesterday that its losses would be relatively low, it still admitted that the total insurance bill could run to “a few billion dollars”.
