The G8 Summit Meeting, which recently met in Japan, faced itsmost challenging gathering in a decade. Like our industry, theyknow they are entering uncharted and risky waters. Are we in theLondon market in the same position? And what is the outlook forbrokers operating in today's increasingly tough environment?

Right now we should all be analyzing our operations and makingthe tough decisions necessary to ensure survival in anydownturn.

We can't deny that we are facing numerous and significantchallenges, mainly unconnected to the broader global economicproblems of the credit crunch and increases in commodityprices.

But at the same time, the London market and the U.K. generalinsurance sector are in robust good health. The fact is thatdespite the ongoing consolidation in the U.K. insurance brokingsector, there are still 8,515 general insurance intermediariesoperating, with primary brokers and intermediaries employing128,000 people.

Meanwhile, today there are 176 firms of brokers working atLloyd's. In the company market, non-life commercial insurance islargely distributed through independent intermediaries--80 percentof the business.

London retains a deep well of insurance talent, and it is goingto need it because there is no doubt that the world riskenvironment is more severe than ever. For example, the tragicevents of the Sichuan province earthquake will bring economiclosses possibly exceeding $60 billion.

Lloyd's has introduced new disaster scenarios, with losses of upto $119 billion for a Florida windstorm and surge, $31 billion fora European windstorm, $15 billion for a Japanese typhoon, and $51billion for a Japanese earthquake.

Meanwhile, new areas of emerging risk, such as identity theft,hit the front pages now on an almost daily basis, and potentialperils such as nanotechnology are emerging.

On other fronts, regulatory developments in Britain and theEuropean Union have led to increased scrutiny. Capitalizationrequirements for insurers will change, which in turn will lead toproduct portfolio shifts. This will create greater uncertainty ininsurance markets.

All in all, London market insurers are in uncharted territory.The question for the industry is whether discipline or growth willwin. Our clients need brokers more than ever to help navigatethrough these uncharted waters.

What of the global insurance markets?

Quite simply, our markets are in a state of flux. We all knowthat premium growth for insurers is tailing off in our traditionalmarkets. Insurers must look elsewhere to build up business inemerging markets, to nurture premium growth in the future. This hasmany implications for distributors.

But how do we finance ventures for such long trends? Capital ismore expensive and insurers are facing a much more challenginginvestment climate.

It has been a very long time since London had a monopoly onspecialist risk advisers and risk-transfer capability. The Londonmarket is clearly no longer the be all and end all--changing globalinsurance markets inevitably means the expansion of emergingdistribution centers in places such as Singapore, China and theMiddle East.

For example, Asia is increasingly seen as the major driver ofworld economic growth. The region is facing a whole range ofemerging risks as brokers and insurers rush to meet those needs--amassive challenge and opportunity. Take note of the following:

o There were three Lloyd's syndicates in Asia in 2005, while atthe latest count there are now 14 and possibly more.

o Foreign inflows of direct investment into East Asia have morethan doubled since 2002.

o Portfolio investment inflows have risen almost tenfold to $130billion in that time.

o Total assets under management by Asian Sovereign Wealth Fundsare estimated to be around $3 trillion--considerably more than U.K.Plc's annual gross domestic product!

There has been much debate about the ability of Western modelsand practices to thrive in what can be markedly different businesscultures. The development of innovative business models is crucialto exploiting these emerging markets and thriving in thefuture.

We need to embrace and embed electronic exchange of informationand transparency of process. A relentless focus on customer servicewill be the cornerstone of any new operating model.

We should remember that aspects of the London market reforms,and wider regulatory measures in the financial services sector, arein part there to meet our customers' understandable concerns aboutprobity and their desire for transparency.

Broker models must reflect the phenomenal pace of technologicalinnovation. Many industries have been radically transformed by theInternet, and ours is becoming one of them.

Technology is allowing more business to be placed online--bothsmall personal lines and also big-ticket accounts. So brokers mustembrace these developments or risk going the way of the recordindustry (or even the TV industry tomorrow).

I also stress the scale of the opportunities that presentthemselves for business expansion in the years ahead. The WorldBank declared recently that the Chinese economy is now the secondlargest in the world. For the iPod generation, the question ofwhere to invest the next 30 years of insurance life is ano-brainer.

My point is that we all can and must do much more than we havebeen doing. In today's fast-changing world, we must use all of ourintelligence and practical understanding to transform opportunitiesinto success and sustained growth.