Insurer CEOs say success depends on smart risk selection
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NEW YORK — Increased capacity in the property/casualty market is putting more pressure on insurers and reinsurers, and they will need to adapt their operating strategies in order to succeed, a group of senior executives from across the sector said.
Improved risk selection and closer relationships with policyholders and intermediaries should be key concerns as insurers and reinsurers seek to expand profitably, they said late Tuesday during the “CEO Panel” at the Property/Casualty Insurance Joint Industry Forum in New York.
With the huge amount of capital in the market “we are going to have to be much smarter in how we choose our risks and where we deploy our capital,” said Henry Klecan Jr., president and CEO of Scor U.S. Corp. in New York.
For reinsurers, that means selecting cedents that have infrastructure and technology in place to understand fully their policyholders' business, he said.
Risk selection is important for insurers, too, said Christopher J. Swift, chairman and CEO of Hartford Financial Services Group Inc. in Hartford, Connecticut.
In addition, Hartford is seeking to build stronger relationships with certain agents — particularly in the Midwest — to make the insurer “easier to do business with.”
While increased capacity in the property/casualty market is a challenge for insurers, the infrequency of catastrophe losses over the past year has been a boon for property insurers, said Thomas A. Lawson, president and CEO of FM Global in Johnston, Rhode Island.
“If you can't make money in large risk property in this environment, you should probably hang it up,” he said.
However, there is increased pressure in premium rates, and insurers will need to analyze closely issues such as risk location and loss control to achieve above average results, he said.
The annual forum was held by the Insurance Information Institute.
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