Lloyds of London has declared 2011 the worst start to a year in the history of insurance.
The organisation runs a market for reinsurance, in which insurers take out protection against having to make unusually high levels of payout. Lloyds lost £697 million in the first half of 2011. It blamed this on an "unprecedented level of natural catastrophes" around the world including floods, tornadoes and earthquakes. The costs to insurers in that six months is already higher than all but two full calendar years in the past.
This has led to suggestions that insurers as a whole are underpricing risk. That could mean attempts to increase revenues, which could have a knock-on effect on consumer premiums. Although Britain has not been directly affected by the disasters, its possible international firms may want to spread the pain among customers worldwide. However, competition among UK companies may mean prices for most types of policy stay low.