With inadequate pricing levels for commercial lines, low interest rates and severe catastrophe losses, it’s high time insurers focus on underwriting discipline, said a veteran insurance executive.
Mario Vitale, co-chief executive officer of Aspen Insurance, said more and more insurers are realizing they need to move away from the cash-flow underwriting model where companies simply get the cash in and invest it. What’s important now is for insurers to make underwriting discipline their primary concern, the insurance exec said.
Vitale offered his remarks last week at a conference sponsored by research firm Advisen and the St. John’s University School of Risk Management in New York.
‘We Need to Focus on What We Do Best’
“Given the current insurance market, insurance companies need to go back to the basics,” he said.
“What do I mean by going back to the basics? I mean we need to focus on what we do best: strong technical underwriting; superior claims service and management; understand the risk; appropriately price risk; training and development.”
“Companies who do this, will emerge successful in this current environment,” he said at the conference. He said it’s about “hiring the right people and getting back to doing the basics in this business.”
Vitale also shared his thoughts on the industry’s job market. He said that in coming years, when the U.S. economy recovers, the industry will need more workers in various fields, not just people with technical insurance expertise.
There are many different skill sets that are required to run the insurance industry, the Aspen executive said. A huge portion of the industry need more than just highly technical underwriting training. To name a few, these include sales and marketing, accounting, corporate law and finance, and IT support.
“Some industries might look to insurance and assume that for an individual to be successful, one needs a highly technical insurance expertise,” the Aspen chief said. “But the insurance industry is diverse. Just this week, I was reading an article…and saw that around 50 percent of the available (insurance jobs online) were not underwriting jobs.”
The insurance industry, at the end of the day, will always be a people’s business, he said. “We aren’t selling a commodity. We are selling a promise, delivered on a piece of paper.”
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