Tumbling premiums have prompted insurers at Lloyd's of London to cut forecasts for the amount of risk that they plan to underwrite this year.

In its annual update on the underwriting capacity of its 75 syndicates, the world's oldest insurance market said that its member companies planned to stand behind £15.95billion of insurance risks this year. This compares with £16.1billion last year and comes despite the emergence of nine new syndicates as well as two managing agents during the past 12 months.

In the absence of natural disasters or big aircraft crashes, premium rates for aviation and catastrophe insurance have fallen by between 5 and 20 per cent, according to industry estimates.

Brokers and underwriters are to scale back or withdraw from some areas altogether, rather than write unprofitable policies, the insurers said.

“Businesses have been signalling their intentions to cut back, particularly as market conditions have been softening,” a spokesman said.

Last year, Amlin said that it would reduce the amount of aviation insurance that it wrote as it believed that global premiums were not sufficient to sustain the industry in the event of a single big aircraft disaster.

The number of individual Lloyd's Names has tumbled almost a fifth to 907. Together, they are prepared to underwrite £921million of risks.

At the beginning of each year, Lloyd's syndicates clear their capacity plans with Rolf Tolle, the market's franchise performance director. Lloyd's said that syndicates can increase their underwriting plans but only in “extreme circumstances”.

Lloyd's added that this year would be the last time that it published annual capacity numbers.

In future, Lloyd's is to report annual gross written premiums to bring its members into line with the wider insurance market.

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