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.