NU Online News Service, Jan. 27, 2:11 p.m.EST

The revival of the New York Insurance Exchange will not have ahuge impact on the insurance marketplace because the securitiesmarket is already filling the capacity needs of insurers, theInsurance Information Institute's president said.

Robert Hartwig made his comments in response to a question posedduring a seminar yesterday titled "Insurance Megatrends for theDecade Ahead and Lessons Learned from the 2000s for the 2010s."

The event was sponsored by the I.I.I. and Fireman's Fund, acompany of Allianz.

Mr. Hartwig said it is currently difficult to understand whatthe impact of the exchange will be on the insurance marketplacebecause so little is known about it. But at this point, he does notsee the program, which would act as a syndicate similar to Lloyd'sof London, having a major impact on the insurance industry.

He cited insurers' success reinsuring with catastrophe bondsthrough the equity markets He also noted that Lloyd's provides amajor alternative for risks.

Mr. Hartwig was joined by Jay Ralph, Allianz SE board member forInsurance North American Free Trade Agreement Markets.

The two discussed four major trends that they see havingsignificant impact on the insurance industry for the nextdecade:

o Catastrophe loss

o Climate change

o Digitization

o Demographics

Catastrophe losses will continue to rise in the coming decade,following the increasing trend in insurance losses beginning in the1990s, said Mr. Hartwig.

While the United States and Europe account for the bulk ofinsured losses, the economic growth in China and India spell moreinsurance penetration eventually, he advised.

In the United States, more pressure will be placed on governmentto cover catastrophe risks the private markets refuse to cover,predicted Mr. Hartwig.

Mr. Ralph said as an insurer, Allianz is dealing with thesechallenges by pooling and swapping risks and turning to capitalmarkets for capacity.

Climate change remains a complex global issue that will place aburden on insurers to meet the demands for emerging risks for greenbuildings, professional liability and environmental issues, saidMr. Hartwig.

The promise of technology, he said, means improved pricingformulas for insurance and empowering consumers with choices andinformation, he noted.

But, technology does not seem to be leading to the demise of theinsurance agent, noted Mr. Hartwig. Overall, he said, statisticallythe number of agents handling business appears to be unchanged, andthere is no reason to believe that this will change in the decadeahead.

Mr. Ralph remarked that greater connectivity in the decade aheadwill give insurers the ability to provide more services toclients.

As Americans hold off retiring, it will present challenges forinsurers, said Mr. Hartwig. He noted statistics show older workersare more prone to injury and take more time off from work forillness.

There is also a higher rate of auto accidents and death amongthose age 75 and up, Mr. Hartwig said, noting that the rate ofdeath from auto accidents for this age group is almost equal toteens.

An aging workforce will also mean more lawsuits for agediscrimination, he added.