Industry Leaders Say They Are Concerned About Recovery
The leading concern of global insurance executives is recovery from adverse political, economic and market conditions, according to a survey of attendees at the annual seminar of the International Insurance Society.
Other top concerns were meeting customer demands; managing risk on existing and new liabilities; maintaining competitive pricing with adequate profitability; and productivity, improved operational efficiency. These were responses rated number one most often from all participants, who amounted to 6% of total registrants at the annual IIS seminar last month.
Discussing this years number one concern about adverse political, economic and market conditions, Brian OHara, chairman of XL Capital in Bermuda, said this relates in part to the “overhang of the Iraq war.”
Other “overhangs” have created a lot of fear and uncertainty, such as the economy, investment returns and the U.S. tort problem, he indicated.
Further, the bubble of the 1990s and its collapse affected “the insurance and reinsurance industry in a very profound way both coming and going,” he said during a press conference to discuss the results of the survey.
“The [investment] returns from the period caused behavior to be such that underwriting practices really went very awry,” he said.
“The collapse of the bubble not only devastated balance sheets in terms of economic losses on investment portfolio but also created a whole new wave of underwriting losses,” he said, citing the example of professional liability–directors and officers and errors and omissions covers on banks.
Further, he said, it created a governance issue that is affecting all of corporate America, including the insurance industrys ability to continue to provide professional liability.
These are all daunting problems that the industry is grappling with, and looming behind it there is also “the tort problem in the United States, which exacerbates the whole professional liability scene,” he said.
The IIS survey revealed how issues are changing over the years, with last years top concerns being:
Managing risk (number three this year);
Maintaining competitive pricing and adequate profitability (number four this year);
Keeping and building organizational talent (which didnt show up this year); and
Meeting customer demands (which was number two in this years top-ranked items).
The top issue in the 2001 survey was meeting customer demands, while in 2000, influence of technology and e-commerce was the top item.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 4, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.