Lloyd’s CEO Richard Ward says this year’s early onset of natural catastrophes does not auger well for industry profitability.

Speaking at a conference in London last week, he said insurers executives must avoid chasing short-term profits to avoid a “perfect storm” of catastrophic claims.

“There is a significant challenge for the industry… but one we can see coming,” he said.

“Insurers who keep their discipline and don’t chase risky short-term profit will stand the best chance of long-term survival.”

Mr Ward’s comments come with the onset of the US tornado season, which in 2008 cost the insurance industry £1 billion ($1.75 billion) in claims. Insurers and reinsurers have already taken some major hits this year from disasters both natural and man-made.

Claims from the Chilean earthquake, Winter Storm Xynthia, Melbourne and Perth storms and Gulf of Mexico oil spill have reached at least $9.6 billion to date.

As reported in insuranceNEWS.com.au last week, insured losses from the catastrophic storms that battered Melbourne and Perth have risen to $1.85 billion.

While Lloyd’s recorded profits of £4 billion ($6.83 billion) last year, Mr Ward says such profits could be wiped out with “just one serious catastrophe”.

He says insurance companies must “keep their discipline” as low investment returns and weak rates squeeze profit margins.

“We’ve helped protect the economy during the crisis,” he said. “Now it’s time to protect ourselves.”