Everything from pandemics to the world economy are top concerns in the minds of insurance leaders according to a poll of issues that keep five of the Island?s senior leaders from sleeping at night.

A pandemic is at the top of the list for Brian O?Hara, president and CEO of XL Capital. With experts around the world split on whether or not the world will be able to arrest and detain the possible human-to-human spread of a Avian Flu, his company has been trying to determine how much risk to expect. One thing insurers learned from Hurricane Katrina is that the insurance sector will feel the blow in many indirect ways.

?The implications with a real pandemic where you have tens of millions dying in the US, it is not going to just impact life insurance. These people will not be paying their mortgage, credit card bills, it is going to have domino effect in the financial world and impact professional liability, E&O and D&O and the like. So, when you start studying that fat tail stuff it is pretty scary and a wonder we get any sleep,? he said.

A ?plaintiff bar that doesn?t sleep at night? while it tries to figure out the next payday perhaps with the help of the ?son of Spitzer? is another issue. Mr. O?Hara added that suits with an emotional context such as discrimination are often easy fodder for court settlements since nobody wants to take them into a court. He worries about possible class actions arising from global warming if ample ?smoking gun evidence? becomes available.

The many options available to terrorists who want to destroy lives and property is another ongoing concern in the sector, according to Kenneth LeStrange, chairman, president and CEO of Endurance Specialty Holdings Ltd. Financial issues, particularly consumer and financial debt and the growing influence and the amount of money invested in hedge funds are another concern.

The sector currently exists in a world where there is tons of liquidity in the market, but Mr. LeStrange asked: ?What would happen if there wasn?t??

Michael Butt, chairman Axis Specialty Limited is also worried about major economic/systemic dislocation as well as na?ve capital being invested in the industry behind incompetent underwriting.

Brian Duperreault, chairman of Ace Ltd., is most concerned about maintaining controls over business processes. He notes that insurers generally never fail on a single catastrophe but rather on a culmination of some bad business practices.

He said: ?So many people making so many decisions on day to day business. To me, that control is most important thing for insurance executive to be concerned about. We know there is going to be another big event maybe tomorrow, two years from now. You?re covering that, you?re expected to pay and move on and charge and we?re in a wonderful world where post 9/11 or post Katrina or Rita, prices go up and stock prices go up and the market loves you.

?It is a weird thing but not necessarily bad for business. But poor underwriting and performance over time, that will kill you. That is what worries me.?

Rating agencies were another subject under discussion during the presentation yesterday with Mr. Kramer noting that ratings have become the ?virtual licence? for insurers.

?You can see the skittishness. In one highly publicised case, a single employee left the company and the company?s rating was put on outlook negative. So, ratings agencies have become, without a doubt, the virtual licence in this business.

?By the same token, as a consequence of the hurricanes, no company failed because of its inability to do claims but companies were driven to liquidation or runoff principally because their ratings were withdrawn or taken below an acceptable level,? he said.

The ratings agencies are ?cataphobic? according to Mr. Kramer due to their absolute belief that another Katrina is imminent in the 2006 hurricane season.

The sector is also facing the possibility of ?double counting? since the changes to the ratings agencies come at the same time the modelling agencies have also revised their models.

Mr. O?Hara, however, noted that where ratings agencies took a rather simplistic approach in the past, today?s in-depth evaluation really looks into the fundamentals of the business model including volatility and dependable earning streams.

?Maybe they are a more positive on an industry which too often and too quickly will declare victory after a good year and will start cutting rates and increasing volatility. They will be there quickly to take action on ratings if that behaviour emerges. So, in the longer run they should have a very positive impact on industry behaviour and hopefully on returns in the longer run,? he said.