Orlando, Fla. – Lloyd’s of London Chairman Sax Riley says that you shouldn’t be in the insurance business unless you’re optimistic. Optimism, to say the least, has been in short supply in the last year or more in the industry.
Riley was among four panelists who shared their thoughts with a large group of attendees Monday morning at the opening session of the 15th Annual PLUS Conference.
Journalist Charlie Rose served to moderate the discussion, which included Dinos Iordanou, CEO of Arch Capitol Group; Brian Duperreault, Chairman and CEO of Ace Limited; and John Keogh, President of National Union.
Riley said after standing at the World Trade Center site five days after the disaster last year, he knew a major crisis was looming. “It has only gotten worse since that day,” Riley commented. “While I am an optimist, I don’t see anything ahead but turbulent waters.”
Among the areas all four agreed on was that there must be a major effort in restoring professionalism at the managerial level.
“There has definitely been a lack of discipline in the risk business,” Iordanou remarked. “A lot of our industry’s wounds have been self-inflicted. Senior management has not been watching the cash flow, they’re not doing their jobs.” Keogh, who was sitting in as a replacement on the panel, added that there is “Still a long way to go to get a reasonable return to equity.”
The panelists also noted that litigation in professional liability is out of control at the present time.
“The American legal system is taking over parts of the U.K.,” Riley remarked. “Asbestos claims, however, are minimal as compared to in the U.S.”
When asked by Rose if the industry has a public relations problem, all agreed the industry has some work to do. Rose added that it is “Incumbent among corporate America to tell a great story.”
“We talk all the time,” Duperreault commented. “It all comes back to leadership. We need to restore some professionalism at the managerial level. We are in a cyclical business and prices will eventually move in a different direction.”
Iordanou added, “That is the million dollar question, when will this cycle end?”
The panel noted when asked by Rose that future markets rest in a number of areas, including China, parts of Europe, Russia, and India.
While the two-hour discussion looked at some very serious topics impacting the industry, there were a few exchanges of humor among the panelists.
When one attendee asked about the performance of underwriters, Keogh noted a baseball analogy to how a player does with his statistics each year when looking at their trading cards and how that impacts future contract negotiations.
Duperreault added “Maybe they’re should be trading cards for underwriters,” drawing a large laugh from the crowd.
The conference continues through Tuesday with a number of workshops, sessions, and a wrap-up discussion on the state of the industry.
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