Premiums to rise, says Lloyd's chief

Richard Ward. Photo / Martin Sykes

The chief executive of insurer Lloyd's has good news and bad news.

Richard Ward says the 300-year old company has avoided global carnage in the financial sector and is in good shape, but it will need to increase premiums to help ensure it stays that way.

"At the moment there's a lot of concern about financial services. As a result of Lloyd's' conservative approach to dealing with investments and risks we'll trade through this crisis," said Ward in Auckland yesterday.

Of $130 billion invested, only about 5 per cent was in shares, with the bulk in corporate and government bonds. This effectively meant big returns on investments were evaporating.

Unlike AIG, Lloyd's has not diversified into the exotic financial products that have led to a $300 billion bailout of the US insurance giant.

Ward has been in New Zealand talking to brokers and clients about the state of the market.

"Clearly the insurance industry is not going to be insurance proof. As a result of the shortage of capital and the shortage of investment income people are going to see the cost of insurance increase."