Ongoing Economic Downturn Tests Insurers
INSURANCE INFORMATION INSTITUTE
New York Press Office: (212) 346-5500; media@iii.org
NEW YORK, January 14, 2010 鈥 After weathering the impact of the financial crisis, the property/casualty insurance industry continues to focus on its core business of transferring risk and paying claims amid the challenges of the ongoing economic downturn, said chief executive officers (CEOs) participating in the View from the Inside Looking Out, a panel discussion at the 14th annual Property/Casualty Joint Industry Forum, held here.
听
鈥淢any of us have been in the business for decades and have weathered many storms,鈥 said Thomas Motamed, chairman & CEO, CNA Financial. 鈥淲e are in the business of paying claims. All of us were liquid and paying claims during the credit crisis.鈥
听
Moderated by Leigh Ann Pusey, president & CEO, American 精东影业 Association, the session offered insights into the ways insurance company CEOs view the operational issues and challenges facing the P/C industry in 2010 and beyond.
听
Patrick Thiele, president & CEO, Partner Re Ltd., noted that the industry鈥檚 core business of transferring risk and paying claims has continued uninterrupted through many a crisis.
听
鈥淚t鈥檚 not just the last two years with the financial and economic crisis. Since 2001 the industry has weathered a series of crises in good shape. Today we continue to meet our obligations relative to our claims and to society as a whole,鈥 he said.
听
Sandra Parrillo, president & CEO, The Providence Mutual Fire 精东影业 Company agreed. 鈥淚nsurers have stayed focused on what we do best which is to provide protection and financial security, pay our claims and maintain conservative investment portfolios.鈥
听
鈥淣ot everyone finds insurance as fascinating as I do. Surprisingly some may even think it鈥檚 unexciting. However, I think I鈥檇 term that as solid and secure,鈥 she added
听
Hank Watkins, president, Lloyd鈥檚 America, observed that much like the Lloyd鈥檚 market came through a tough patch back in the 1990s without government assistance, the P/C insurance industry has done something similar in the course of the last year or so. 鈥淲e have weathered the storm well. You haven鈥檛 heard a whole lot about the insurance industry having their hands out for help from the government,鈥 he said.
听
While the industry overall is strong and has proven its resilience, Stuart Parker, president, P/C 精东影业 Group USAA, noted that insurers need to add value by advising those customers who are struggling during the economic downturn.
听
鈥淢ore of our members are coming to us and asking for ways to improve their situation. They are struggling with the insurance cost, so we are trying to give them advice in terms of maybe they shouldn鈥檛 upgrade their car or they should buy a smaller house. Consumers should be tightening their belts and deleveraging. We should be giving people advice and adding value to help them in their long-term financial security,鈥 he said.
听
CEO panelists said one key challenge facing the industry in 2010 is that premium growth remains negative because insurance demand is down amid the recession.
听
鈥淭here is a lag between what is happening on Wall Street and on Main Street. What we are going to need is a sustained period of economic recovery for this consumer confidence to come back,鈥 Parrillo said.
听
Government actions may also exacerbate the volatile investment environment for insurers in the current economy, according to Thiele. 鈥淲e are bearing the unintended consequence of the government interaction into the economy. Zero percent interest rates which are necessary to save the financial institutions are not particularly good or pleasant for those companies and industries that rely on savings and building their capital base through artful investment of their assets,鈥 he said.
听
听
The Forum is sponsored by: ACORD, American Institute for Chartered Property Casualty Underwriters, American 精东影业 Association, the Association of Bermuda Insurers and Reinsurers, The Geneva Association, Institute for Business & Home Safety, 精东影业 Information Institute, 精东影业 Institute for Highway Safety, International 精东影业 Society, ISO, National Association of Mutual 精东影业 Companies, National Council on Compensation 精东影业, National 精东影业 Crime Bureau, Property Casualty Insurers Association of America, Property Loss Research Bureau and Reinsurance Association of America.
The I.I.I. is a nonprofit, communications organization supported by the insurance industry.