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WHITE SULPHUR SPRINGS, W.Va. -- Predictions on whether the commercial insurance market could see a turn in pricing next year are about as varied as the colors of the forests of West Virginia.

At the 85th Insurance Leadership Forum, the annual joint meeting of the Council of Insurance Agents & Brokers and the Council of Insurance Company Executives, held last week at The Greenbrier resort in White Sulphur Springs, W.Va., talk among some executives turned to whether the market would see firmer pricing in 1999.

Some insurance company executives predict that depressed stock and bond markets will force higher pricing next year, while other executives see such change as unlikely or likely only in isolated pockets.

Although there was no consensus on when or how the extended soft market might end, there was plenty of discussion of change in the market.

A leading topic of discussion by speakers and attendees alike was technological change and what it means for the insurance industry (see story, page 10).

Change also was a theme of speaker Max Taylor, chairman of Lloyd's of London, who provided an overview of changes occurring at Lloyd's and proposals for the future.

"As we face these times of great change, we at Lloyd's are genuinely reinventing ourselves," Mr. Taylor said. "We've been through a revolution in regulation, we're going through a revolution in our capital base, and have yet to go through a revolution in our distribution system and product focus," he said.

One of Lloyd's biggest challenges in managing change is striking a balance between adopting new ways of doing things and keeping the best of its traditional methods, Mr. Taylor noted. For example, the market is embracing new forms of capital while it continues to rely on traditional unlimited liability names, Mr. Taylor said.

The market currently is examining whether to change its annual venture system, whereby capital is committed to syndicates for only 12 months at a time. "It has served us well. But going forward, we think fully paid-up permanent capital will be the way to go," Mr. Taylor said.

In addition to seeking longer-term capital commitments, the market's source of capital has changed dramatically. Corporate capital accounts for about 60% of the market's total 1998 capital of L10.13 billion ($17.01 billion), he said. By next year, that percentage is expected to grow to 70% to 75%.

Lloyd's increasingly is moving to a dedicated capital model, in which corporate investors provide capacity to specific syndicates and agencies, which is generally regarded as more efficient than its historic method of allocating capacity to syndicates, said Mr. Taylor.

Investment in Lloyd's by corporate entities, such as insurance and reinsurance companies, is expected to continue. Indeed, that trend could be accelerated by the A+ rating for the market that was provided by Standard & Poor's Corp., which forecasts long-term earnings capacity, noted Mr. Taylor.

Lloyd's is also seeking to manage change in its distribution model.

"Our objective for change in distribution is to find a balance" between the existing system of Lloyd's brokers and access by brokers outside the market, Mr. Taylor said.

Lloyd's expects that large sophisticated risks will continue to work within the current distribution system, as they have done in the past, Mr. Taylor said. But as the market seeks to expand, Lloyd's underwriters also want ease of access to business in overseas markets, Mr. Taylor observed.

Geographic expansion is another driver of change.

Lloyd's holds licenses around the world, noted Mr. Taylor. It has a longstanding presence as an underwriter of primary business in most English-speaking countries, while in most other countries it also has long provided reinsurance.

Lloyd's is seeking to expand its presence in Latin America and the Far East, Mr. Taylor said.

One form of change has been a constant at Lloyd's since its inception: product innovation. "We are a risk-taking market, not a risk-avoiding market," the chairman said.

Lloyd's recently has introduced new products in such areas as coverage for liability from contaminated products, losses caused by rogue traders, the costs of failed merger or acquisition bids, and political risk coverage for service companies, Mr. Taylor commented.

In addition, Lloyd's is likely to be at the forefront of developing alternative risk transfer products, once "structural constraints" are overcome, he said.

Ultimately, Lloyd's strength lies in its ability to change, according to Mr. Taylor. "Lloyd's culture of change and flexibility is the key to our success," he said. But amid all the changes it undertakes to remain competitive, "Lloyd's underwriting skills and culture will be retained above all else," he stressed.