Coping with the current credit crisis is causing both insurers and their clients to reassess the way that they look at risk, according to insurance industry experts.

The experts were participating in a panel discussion here at a life insurance industry executive conference.

The conference, the 19th in an annual series, was sponsored by Dewey & LeBoeuf L.L.P., New York; Ernst & Young L.L.P., New York; and Summit Business Media L.L.C., New York, the parent of National Underwriter.

The panel was moderated by Bob Stein, a partner with E&Y’s Global Financial Services unit.

Neil Salowitz, marketing director of the insurance advisory group at Principal Global Investors, a unit of Principal Financial Group Inc., Des Moines, Iowa, compared the current crisis to a once-in-500-year flood.

The industry could not have anticipated the events that were to come in a 6 month period, Salowitz said.

Enterprise risk management–a holistic approach to managing risk,–will continue to be an important part of how insurers manage risk, and the companies that do not have strong ERM programs in place may face more difficulty surviving in the long-term, Salowitz said.

As consumers seek safety, “there will be a flight to quality,” Salowitz predicted.

Insurers will have to be more careful about the effects of product guarantees on regulatory capital, but, at the same, consumers will understand risk better than they have in the past, Salowitz said.

Consumers will be less comfortable with the do-it yourself approach to investing in their 401(k)s, Salowitz said.

David Magers, executive vice president and chief financial officer at Country Insurance & Financial Services, Bloomington, Ill., said preparation goes a long way when companies face the kind of credit crisis that the United States is now experiencing.

Changing fundamentals during a crisis is like “fixing the roof during a storm,” Magers said. It “it will leave permanent scars, as opposed to bruises.”

As an industry, “we leveraged risk and didn’t have the capacity to pay for that risk,” Magers said. “We need to understand our capacity for risk and what we should be paid for it.”

Magers reported that his company’s core group of consumers is made up of individuals with $50,000 to $500,000 in assets.

“In that group, there are a lot of people who are frightened,” Magers said.

Many consumers had come to believe that 401(k)s would continue going up 15% to 20% per year year and did not understand there was actually risk associated with investing in the stock market, he added.

Magers said he fears insurers will try to lure consumers back with overly generous guarantees.

Magers predicted that there also may be a need for consumers or their representatives to do more of their own homework before investing, because the “rating agencies have lost some of their credibility.”