Insurers need to break from a price-driven, commodity-based business model–akin to one used by fast food giant McDonald's–and focus on service and underwriting instead, Liberty Mutual's head warned.
Edmund Kelly, chairman and chief executive officer of Boston-based Liberty Mutual, ranked “differentiation based on service rather than price” as the second-greatest challenge for insurers during his keynote address here at the 18th Annual Executive Conference for the Property-Casualty Industry–directly behind the challenge of dealing with federal lawmakers on catastrophe and terrorism issues.
“While a significant natural catastrophe has the potential to do extraordinary damage to this industry, I would posit that we in the industry have destroyed far, far more capital through bad underwriting and pricing competition than any catastrophe,” he said.
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