The International Insurance Society’s 40th annual convention concluded proceedings yesterday, July 14, in London. The three-day meeting featured presentations and panel discussions from industry leaders.
Patrick Kenny, I.I.S. president and CEO, and Douglas Leatherdale, I.I.S Board Chairman, welcomed delegates at Monday’s opening ceremony. After remarks from Lloyd’s Chairman, Lord Peter Levene, Alderman Robert Finch, Lord Mayor of London, gave the keynote speech and welcomed the I.I.S. to his city.
The society has been bringing world insurance leaders together for 40 years, and offers a unique perspective on the current state of the industry, its problems, challenges and possible solutions. This year’s conference focused on “Benchmarks of Success,” i.e. how do companies know how they’re doing; how do they measure their success; how do they spot problems; and eventually how can these be corrected.
Contrary to last year’s gathering in New York, where such issues as terrorism and the steep fall in equity markets topped the industry’s list of concerns, this year was more upbeat. An electronic survey, conducted by Gregory A. Maciag, the genial head of ACORD, found the current number one concern to be how to take advantage of new markets and exploit new opportunities. The respondents were also occupied with “keeping and building organizational talent,” and of course how to maintain competitive pricing in the face of a softening market.
The turn of the cycle was a leitmotif that ran through most of the conference. “Three years of good results is not enough to overcome 20 years of underwriting losses,” Levene said in his opening remarks. He noted that the U.S. insurance industry had lost around $400 billion over that period, and could not continue to do so.
The opening panel discussion, moderated by Leatherdale, featured Brian O’Hara, XL’s president and CEO, John Coomber, Swiss Re’s CEO, and Tomijiro Morita, Chairman of Dai-Ichi Mutual Life, one of Japan’s most successful life insurers. O’Hara focused on the need to create and maintain a strong and disciplined corporate culture, calling it the “critical success factor of a company that cannot be emulated by your competitors.”
Coomber pointed out that “underwriting performance is the key to success.” He also compared the insurance industry’s performance with the banking sector, noting that while bankers had moved some $2.5 trillion worth of risk into the capital markets, insurers had only around $2.5 billion invested there, mainly in alternative risk transfers. Global capital markets total, around $6.5 trillion, and Coomber’s clear suggestion was that the industry hasn’t taken advantage of the fact in managing its risks. But the four participants in a press conference held on Tuesday, including Levene, thought the suggestion impractical. Simply put, banks don’t accept the risk levels insurers do, and therefore transferring risk to the capital markets isn’t going to happen on any large scale.
The Monday afternoon session answered the rhetorical question “Who’s running this industry anyway?” with a whole-hearted endorsement of the current management system. Neither the regulators, nor the rating agencies claimed more than an oversight role in its governance. Following the conference’s “benchmark” theme, however, most of the speakers agreed that both regulators and rating agencies play a necessary, even vital, role in enforcing guidelines, standards and discipline.
Other panel discussions included an examination of how to manage mergers and acquisitions, how to measure and evaluate risks, both in managing corporate capital and in underwriting, and how to protect and manage that capital.
Swiss Re hosted a final reception at its imposing new London headquarters. The building, at 30 St. Mary Axe, a stone’s throw from Lloyd’s on Lime Street, has been dubbed “The Gherkin” [pickle] by local residents due to its highly unusual oval shape sheathed in some 6000 panels of glass.
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