NU Online News Service, Oct. 6, 11:04 a.m.EST

COLORADO SPRINGS, COLO.—Insurance carriers understand that thereare no easy answers to the earnings challenge the industry isfacing, and some of them believe that competing on price alone isnot the answer to finding new commercial markets.

In an address earlier this week during The Council of InsuranceAgents & Brokers' 98^th annual Insurance LeadershipForum, Paul Krump, president of commercial and specialty lines forChubb Group of Insurance Companies says insurers are experiencingsignificant pressure on their business.

He says the current situation is “corrosive” for the industry asit deals with a significant catastrophe year that is eating away atreserves. Earnings have seen additional erosion with an investmentenvironment that is not producing significant returns.

Insurers are feeling pressure to get rate through underwriting,but he cautions that the industry needs to balance that desireagainst the objectives of its policyholders.

“We must not lose sight of our primary mission—to take care ofour customers, but we must also take care of ourselves,” saysKrump.

Insurers, he says, must not add to the angst clients areexperiencing in these very turbulent economic times.

“They are seeking some semblance of certainty in uncertaintimes,” Krump says.

In an interview with NU Online News Service, Mike T. Foley,chief executive officer, North America Commercial and regionalchairman of the Americas for the insurer Zurich says these arechallenging times for insurers as they deal with less return onpremium and a very slow economic environment where commercialclients buy less insurance.

Carriers need rate to improve earnings, he notes, but he issurprised that the industry has not reacted.

Instead, risk is assessed on an individual basis and in thatcase, he says Zurich is confident it is getting the rate it needs,in part because the company deals with “sophisticated”policyholders who understand the market dynamics.

At a time when it is important to differentiate yourself, Foleysays that Zurich does so by having a conversation with a customerand conveying that the company brings “unique insights” to thetable.

For one specialty insurer, the concentration is not on rate butunderstanding the needs of customers and introducing products thatsatisfies those needs.

Bronek Masojada, chief executive, Hiscox Partner for thespecialty insurer Hiscox Group, says individual companies “need tomanage their business and not hope for a big price to make theirearnings better.”

In that vein, Hiscox has introduced several products andinnovations in the United States aimed at doing that.

One example is Hiscox One, a specialty product for theentertainment industry. Masojada explains that typically, suchpolicies are cobbled together from various different forms. HiscoxOne manuscripts all of the diverse underwriting language into onepolicy.

Masojada says that this provides contract certainty and closesgaps in coverage that policyholders experienced in the past. Theproduct is designed for productions valued from $1 million to $25million.

“To survive, it is all about innovation,” Masojada says. “Onlythrough innovation can we separate ourselves.”