Willis Chairman and CEO Joe Plumeri, speaking at a conference sponsored by Insurance Day in Bermuda, sees opportunities for the insurance industry in the current financial crisis.
In his keynote speech, Plumeri said he believes that in a time of financial turmoil, the insurance industry faces an unprecedented opportunity to begin selling on value and not on price. Moreover, the insurance industry should make the most of being a capital provider and risk adviser in a time of scarce capital and huge risk. “In a time of fear, we offer security. In a time of scarce credit, we provide capital. In a time of newfound risk awareness, we are the risk professionals. All of this puts us in an exceptional position to lead,” Plumeri stated.
He also noted that “greater transparency in business transactions” has resulted from the financial crisis, which has given the insurance industry “a perfect opportunity to showcase all that we do and the value we provide, because we will need to explain why we charge what we charge and what it is that clients get for their money. We are not just buying policies at the best price – we offer analysis and fight for the best possible terms. We are selling an experience, not a commodity. Now is our time to prove that insurance is more than a retail transaction, insurance is a partnership.”
Plumeri also repeated Willis long held stance that contingent commissions should be abolished once and for all as they represent “manufactured revenue and not added value.”
He also pointed out that, as new risk assessment that will be needed to accommodate new business models, the industry’s expertise in this area can provide the “true Enterprise Risk Management,” which its clients will increasingly demand. “We will need to apply the analytics and modeling sophistication that we’ve developed in the reinsurance sector for the retail side,” he added.
Plumeri applauded the industry as a whole for “sticking to its knitting,” investing conservatively and learning and evolving from past adversity.
Plumeri’s speech was centered on a concept from Joseph Schumpeter, a Czechoslovakian economist in the early twentieth century, who said that capitalism moves forward following a process of “creative destruction.” “Inevitable cycles of expansion and retraction are not only survivable, but are in fact the secret of capitalism’s extraordinary power to inspire innovation and progress. Insurance is going to be one of the essential building blocks of recovery. We will help the world find the ‘creative’ in creative destruction,” he concluded.
A full copy of his speech is available at: www.willis.com/What_We_Think/Publications.
Source: Willis Group Holdings – www.willis.com