Regulation of insurers seen as double-edged sword
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Regulation and consolidation were the topics of choice for the CEO panel Monday at the Property Casualty Insurers Association of America's annual meeting in Boston.
Industry regulation can be a double-edged sword, said Michael McGavick, CEO of insurer and reinsurer XL Group P.L.C.
“Government regulation is essential to creating confidence in our products,” Mr. McGavick told a capacity audience. He added, however, that too much regulation can bring onerous consequences to the insurance industry.
“If regulation gets out of control, there will be requirements of capital which require greater concentration.” This, he said, could become a catalyst for consolidation resulting in “large companies with little creativity.”
New York-based Joseph Brandon, executive vice president of Alleghany Corp., said he believed a trend toward consolidation in the insurance industry would continue, but he disagreed with Mr. McGavick's monolithic prediction.
“There will always be a place for small and medium-sized companies with specialties and strong customer relationships,” said Mr. Brandon, adding that the pace and instances of consolidation will be “episodic and hard to predict.”
