NEW YORK — To remain relevant in a changing world, insurers mustassume relevant amounts of risk in areas that matter to clients andresist the temptation to accept government involvement in difficultareas, according to ACE CEO Evan Greenberg.

Speaking here Friday at an Insurance Federation of New York(IFNY) luncheon, where he received the Free Enterprise Award, Greenberg said, "We areexpected to innovate in areas where exposure is being created.Risks such as terrorism, cyber risk and flood insurance all come tomind."

He noted that insurers can only take risk to the extent thatthey understand it and have the balance sheet wherewithal, but headded, "With that said, we shouldn't be so quick to expect andaccept government involvement, which should be limited to extremeand systemic-type events truly beyond the industrycapabilities."

Greenberg continued, "And our capabilities are evolving, andthey are growing, and they will continue to do so."

New York Department of Financial Services SuperintendentBenjamin Lawsky concurred with Greenberg to a large extent,stating, "Whenever possible, government should stay the heck out ofthe industry." 

He said government-run programs should be limited, wherepossible, and indicated problems experienced in these programsreflect badly on private insurers. Pointing to the National FloodInsurance Program as an example, Lawsky said, "It did not performwell after Sandy. It ran way behind the private insuranceindustry."

He added, "The problem is, the poor performance of the NFIP, inmy opinion, for regular consumers, they just blamed the insuranceindustry."  

However, Lawsky said terrorism—in particular nuclear, chemical,biological and radiological attacks—is an exceptional risk that theindustry will likely never be able to properly model, and he saidthe Terrorism Risk Insurance Act should not only be renewed, butmade permanent.