Israel at risk of an earthquake - Lloyd's of London

"Just 10 days ago the strongest earthquake in a decade was felt across the country, "Lloyd's chairman Lord Peter Levene said.

Peter Levene 88 224 (photo credit: Courtesy)
Peter Levene 88 224
(photo credit: Courtesy)
Israel is at risk of an earthquake, according to Lloyd's of London, the world's largest so-called insurance market. "Israel is at risk from earthquake," Lloyd's chairman Lord Peter Levene said in an interview with The Jerusalem Post Monday. "Just 10 days ago we were reminded of this when the strongest earthquake in a decade was felt across the country." The former lord mayor of London is in Israel this week to commemorate the 60th anniversary of Lloyd's activity in Israel. Lloyd's insures a wide range of industries in Israeli, including the hi-tech sector, medical and life sciences, industrial sector and the diamond industry. "In this 60th anniversary year, the interest and appetite we have for doing business in Israel is greater than ever," Levene said. "As more and more Israeli companies are going public, expanding internationally, they need more insurance to cover themselves up. Israel is Lloyd's biggest market in the Middle East. Our business in the country currently totals around $140 million a year, with similar growth expected to continue this year." "The same catastrophe underwriters who underwrite Israeli earthquake risk are also likely to be underwriting US windstorm with the backing of the same capital," he said. "We can expect the natural catastrophe trend towards greater losses to continue in the near term, while climate change will also impact sea temperatures and make windstorm landfall and more destructive storms likely." Lloyd's underwriters have said the current financial-market crisis was the greatest potential to impact the insurance industry this year. "With all this uncertainty around us," Levene said, "it is important that insurance does not get sucked into some big black hole of negative consumer opinion about financial services generally… If we are to retain the confidence of the customer, we need full disclosure and complete transparency about who exactly is doing what, for whom, on what terms and at what cost." Outlining the key issues for the industry in 2008 at an event hosted by Lloyd's for more than 300 insurance and business professionals in Tel Aviv on Sunday, Levene said within the context of the credit crisis emerging from the subprime mortgage crisis, liability exposure was another major theme this year. "In the context of a compensation culture which is spreading from the US around the world, the potential liability claims from banks and other financial institutions are of considerable concern," he said. "By the end of last year, 32 class-action lawsuits had been filed by investors against mortgage lenders, Wall Street finance houses and others. As the truth starts to unravel, many more suits are expected to be filed over the next two years, while the list of possible targets will widen." The insurance down-cycle was the number one insurance industry issue for 2008, according to a Lloyd's underwriter survey. "We are heading in the direction of another soft cycle, and Moody's says that global rates are falling by their fastest rate for a decade," Levene said. "Across the Lloyd's market, we can expect a reduction of around 5 to 10 percent of gross premiums this year." Levene joined Lloyd's in 2002. He will complete his second three-year term as chairman at the end of the year. "I am hoping to stay for another term, subject to changes to the Lloyd's Act, which need to be taken by Parliament to allow me to serve three terms as chairman," Levene said.