精东影业

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NEW YORK, January 10, 2012 鈥� Despite paying out billions of dollars in natural catastrophe losses in 2011, the property/casualty insurance industry continues to demonstrate its financial stability, resilience and ability to pay future claims, said chief executive officers (CEOs) participating in the View from the Inside Looking Out, a panel discussion at the 16^th annual Property/Casualty Joint Industry Forum, held here.

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鈥淲e have a lot to be proud of as an industry in the way we performed in 2011,鈥� said Lori Dickerson Fouch茅, president & CEO, Fireman鈥檚 Fund. 鈥淲e weathered the financial storm that came together both in terms of the economy and the extraordinary loss year.鈥澨�

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Shivan S. Subramaniam, chairman & CEO, FM Global, agreed: 鈥淕iven all the things that have happened in the business in the last 12 months, we have done very well for our policyholders in some very bad times. Despite the more than 21 natural catastrophes worldwide, we took care of the needs of policyholders and continue to be very solvent and continue to have strong balance sheets.鈥�

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While 2011 was a remarkable year for catastrophes, Fouch茅 observed that hoping for lower catastrophe losses is not a reliable strategy going into 2012. 鈥淗ope is not a strategy, as much as we would like it to be. We cannot rely on investment results,鈥� she said, noting that insurers need to go back to basics in terms of their business. 鈥淯nderwriting discipline, operational effectiveness and pricing鈥攖hese are the basics of running an insurance company that we have to strengthen, to improve results.鈥�

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David Long, president & CEO, Liberty Mutual Group, said it was the year of non-model cats which exposed some of the strengths in the industry as well as some of the things the industry needs to work on. 鈥淚t hit the fact that a number of lines of business are fundamentally underpriced. So results wouldn鈥檛 have been what you would have hoped anyway and that was masked by those non-model cats.鈥澨�

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The panel also looked at the issue of global supply chain disruption and whether global corporations were adequately protected in terms of insurance and risk management. Many corporations were not protected, which was clearly exposed by the Japanese earthquake and tsunami and the flooding in Thailand, which may turn out to be the second or third largest event in 2011.听

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Subramaniam said that manufacturing and most of the commercial institutions over the last decade have moved to a very high efficiency and productivity mode, which means they use supply chains and outsourcing to a great extent. 鈥淭hat has completely changed the nature of their risk profiles and what the events in 2011 show are that supply chains are very important.鈥澨�

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Subramaniam said there is no way an insurance company can meet the needs of its clients for all their supply chain issues principally because people have suppliers who have suppliers, who have suppliers. 鈥淚t keeps going on and doesn鈥檛 stop. That鈥檚 one of the key things we鈥檝e learned through all of this and that insurance is only part of the solution. Commercial clients are going to have to spend more time on risk management,鈥� he said, adding, 鈥淪upply chain losses are starting to behave like casualty losses, they have a long tail. I suspect for another 18 months we鈥檙e going to continue to hear about losses coming out of Japan.鈥�

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Long noted that part of the problem of supply chain is that the onus is on the business not on the insurance company to take care of it. 鈥淲hat we鈥檙e seeing, because we have an operation in Thailand too, we鈥檙e seeing folks relocating those plants from Thailand to Vietnam,鈥� he said, noting that Vietnam too has its own flood problems. 鈥淲e need much better data, much better analytics on aggregation of commercial risks,鈥� he explained. 鈥淲e do a pretty good job looking at low frequency, high severity storms and we model them pretty well. What we didn鈥檛 do a good job of is high frequency, relatively low severity storms, so we鈥檙e doing a lot of analytical work on that.鈥�

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Looking ahead to 2012, James Kennedy, president & CEO, Ohio Mutual 精东影业 Group, said the focus for his company was firmly on underwriting profit and investment income. He remained bullish on the opportunities for small and medium-sized mutuals to compete in the insurance marketplace. 鈥淢any of the changes we have made in the last 10 years focus on internal alignment and clarity of purpose. It鈥檚 not an issue of size and whether you are big or small, old or young.鈥�

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From the reinsurer鈥檚 perspective, Eric Smith, president & CEO, Swiss Re America, said that emerging markets represent an opportunity for growth, though this is not necessarily a simple task. 鈥淚f you are going to play here you have to be prepared for a bumpy ride.鈥�

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Smith added that low interest rates were causing extreme difficulty for reinsurers. 鈥淲hen events occur you have to replenish capital and rely on investment results to do that, but they are not there now,鈥� he said.

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Moderated by Dr. Robert Hartwig, president & economist, the 精东影业 Information Institute (I.I.I.), the session offered insights into the ways insurance company CEOs view the operational issues and challenges facing the P/C industry in 2012 and beyond.

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The Property/Casualty 精东影业 Joint Industry Forum was created to provide leaders from the widest spectrum of the industry with an opportunity to meet with each other in discussion of topics of general interest. Participants included nearly 250 representatives from property and casualty insurance and reinsurance companies and organizations.

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The sponsoring organizations of the Forum represent a wide spectrum of insurance interests and audiences. They include: ACORD, American 精东影业 Association, the Association of Bermuda Insurers and Reinsurers, The Geneva Association, 精东影业 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, Reinsurance Association of America and The Institutes.

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