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LONDON — The insurance industry needs to evolve to remain relevant to risk managers and their corporations, a group of industry executives said.
Commercial entities face a changing array of risks and are taking a different approach to risk management than in the past, and their needs are not always met by existing insurance products, the executives said during a panel discussion at the International Insurance Society's 50th Annual Seminar being held in London this week.
Already, insurers are failing to offer solutions to most of the risks that corporate clients face, said Lloyd's of London CEO Inga Beale.
In general, insurers take on only about 10% of the balance sheet risks that companies face, so there is a huge opportunity for insurers to grow, even in mature markets, she said.
However, insurers need to adapt and address the new risks facing policyholders, said Evan Greenberg, chairman, president and CEO of Ace Ltd.
“Our ability to remain relevant … and not marginalized is questionable,” he said.
Commerce is developing “in intangible areas,” such as intellectual property, cyber technology and biochemistry, Mr. Greenberg said, and insurers will have to offer meaningful protection to address those risks to remain relevant.
Insurers also need to adapt to meet the needs of a new generation of risk managers who are imposing new demands on the industry, said Dominic Casserley, CEO of Willis Group Holdings P.L.C.
“We are seeing risk managers move from a generation who were primarily insurance purchasers … to a generation who may be differently educated and who have become true risk managers whose clients are the CEO and CFO,” he said.
Those executives are asking risk managers questions about the correlation between traditionally insured risks and other risks that their companies face, Mr. Casserley said.
But it's not just the new risks that insurers need to address from a new perspective, said Nikolaus von Bomhard, CEO of Munich Reinsurance Co.
Insurers are competing aggressively for business as prices weaken after going through a prolonged period when they showed more underwriting discipline, he said.
“I was proud of the industry for a long time because of how we managed the financial crisis. By and large I think it was outstanding … but now we come to the point where I lose my pride a little bit because I see us falling into the old traps that I hadn't seen us falling into in the last 10 years,” Mr. von Bomhard said.