"You have to make it on the underwriting side -- that's back into vogue now," Vitale told BestWire from New York City, where he spoke to a group of students working toward a master's degree at Columbia University. "There is a greater pressure for rates to rise."
Vitale said he believes the industry reached the bottom in terms of rates and is now seeing the industry pass modest, single-digit increases. Vitale said many customers would prefer a slight increase in exchange for stability and predictability from their insurer. He predicts observers will "not see a classic hard or soft market" necessarily as companies look to attract and retain capital.
In his presentation to the students, focused on weathering the financial crisis, Vitale stressed a "long-minded, broader view of risk." The executive unveiled a thick, web-like graphic of risks to visualize their inter-connectivity -- an aspect that is "more profound than ever before," he said. "The world is just riskier." Once you understand that, you can address it and control it with a conservative approach, Vitale said.
Vitale said he has seen some encouraging signs that the economy is making a comeback. In some pockets around the world, hiring is actually going up. Zurich's rate of decline in exposure, due to the economy's effect on commercial insurance buyers, has decelerated to a rate of about 3% rather than the high single-digit decreases that were seen in the recent past.
Zurich's 2009 net profit rose 6% on strong gains in its insurance operations and from its investment portfolio. Net profit for the year rose to US$3.2 billion (2.3 billion euros) from US$3 billion a year earlier. The group's net investment result rose 5% to $6 billion (BestWire, Feb. 5, 2010). Zurich Insurance Co. Ltd. is the main operating entity of the Zurich Financial Services Group, which provides life and nonlife insurance in a large number of countries worldwide. The group has an excellent business profile in Europe and the United States and is expected to maintain its strong competitive position in 2010, according to BestLink, which provides online access to A.M. Best's Global Insurance & Banking Database.