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Nontraditional capacity smoothing insurance cycle: Airmic panelists


BRIGHTON, England — Nontraditional sources of capacity entering the insurance and reinsurance market could help end large market cycles, panelists said Tuesday during the Airmic Conference 2013.

At the conference in Brighton, England, insurer and brokerage executives said pension fund capital and other nontraditional capital has the potential to remain for the long term and not withdraw when market conditions change.

Because the portion of pension funds’ capital base that is being channeled into the insurance industry is relatively small, it could become “long-term capital,” said Stephen P. McGill, group president of London-based Aon P.L.C. and CEO of Aon Risk Solutions.

Such capital is a “significant change and should benefit buyers of insurance,” said Steve Hearn, chairman and CEO of Willis Global and deputy CEO of parent Willis Group Holdings P.L.C.

“I question whether there is ever going to be a hard market as we’ve seen in the past,” Mr. McGill said. Market peaks and troughs that were commonplace in the past appear to have been smoothed more recently, and the duration of markets now are typically very short, he said.

Overall, the insurance market is fairly stable, particularly in the United Kingdom and continental Europe, said John Doyle, New York-based CEO of global commercial insurance in the property/casualty unit of American International Group Inc.

Rates have increased at a greater pace in the United States, where rates on average rose 7.5% during the first quarter of the year, he said.