“Many of us have been in the business for decades and have weathered many storms,” said Thomas Motamed, chairman & CEO, CNA Financial. “We are in the business of paying claims. All of us were liquid and paying claims during the credit crisis.”
Moderated by Leigh Ann Pusey, president & CEO, American Insurance Association, the session offered insights into the ways insurance company CEOs view the operational issues and challenges facing the P/C industry in 2010 and beyond.
Patrick Thiele, president & CEO, Partner Re Ltd., noted that the industry’s core business of transferring risk and paying claims has continued uninterrupted through many a crisis.
“It’s not just the last two years with the financial and economic crisis. Since 2001 the industry has weathered a series of crises in good shape. Today we continue to meet our obligations relative to our claims and to society as a whole,” he said.
Sandra Parrillo, president & CEO, The Providence Mutual Fire Insurance Company agreed. “Insurers have stayed focused on what we do best which is to provide protection and financial security, pay our claims and maintain conservative investment portfolios.”
“Not everyone finds insurance as fascinating as I do. Surprisingly some may even think it’s unexciting. However, I think I’d term that as solid and secure,” she added
Hank Watkins, president, Lloyd’s America, observed that much like the Lloyd’s market came through a tough patch back in the 1990s without government assistance, the P/C insurance industry has done something similar in the course of the last year or so. “We have weathered the storm well. You haven’t heard a whole lot about the insurance industry having their hands out for help from the government,” he said.
While the industry overall is strong and has proven its resilience, Stuart Parker, president, P/C Insurance Group USAA, noted that insurers need to add value by advising those customers who are struggling during the economic downturn.
“More of our members are coming to us and asking for ways to improve their situation. They are struggling with the insurance cost, so we are trying to give them advice in terms of maybe they shouldn’t upgrade their car or they should buy a smaller house. Consumers should be tightening their belts and deleveraging. We should be giving people advice and adding value to help them in their long-term financial security,” he said.
CEO panelists said one key challenge facing the industry in 2010 is that premium growth remains negative because insurance demand is down amid the recession.
“There is a lag between what is happening on Wall Street and on Main Street. What we are going to need is a sustained period of economic recovery for this consumer confidence to come back,” Parrillo said.
Government actions may also exacerbate the volatile investment environment for insurers in the current economy, according to Thiele. “We are bearing the unintended consequence of the government interaction into the economy. Zero percent interest rates which are necessary to save the financial institutions are not particularly good or pleasant for those companies and industries that rely on savings and building their capital base through artful investment of their assets,” he said.