BOSTON—He's said it before but a different forum doesn't stophim from reiterating his thoughts.

“The world is changing too fast to innovate the way weused to,” says XL Group CEO Michael McGavick, one of the mostoutspoken industry executives on innovation. “We must become moredaring.”

During a CEO Panel here at the PCI Annual Meeting, McGavick saidinsurance as a percentage of the global gross domestic product hasdeclined. The gap between insured losses and economic losses iswidening. “This is the sound of us becoming irrelevant,” statedMcGavick, who points to companies taking on higher retentions andusing self-insurance options for coverage the market can't or won'tprovide.

Quite simply, the insurance industry has to try to come upsolutions to the world's newest risks and XL, according toMcGavick, has. The insurance group has given the market a “longlist” of new products, he said. Most recently it started a team toprovide U.S. corporate clients with product recall, war, terrorismand political violence, and kidnap, ransom and extortion insuranceand its Political Risk and Trade Credit business expanded into thesupplier trade credit market.

“Don't just see the potential failure of the product,” McGavicktold PC360 after the panel. “Why not take on theproblems,” of flood, cyber and business interruption and supplychains? Yes, the industry does not have a wealth of data on theserisks but some are moving too fast to wait and keep playingcatch-up, he added.

“You must look at adjacencies rather than historical data sets,”he offered.

With overall company vitality in mind, McGavick admittedinsurers must establish some parameters. “Like your pocket money atthe casino, once that runs out you may be done for a littlewhile.”

But things cannot go on as the have because, in part, theindustry looks bad. With flood insurance, for instance, theindustry “gets a black eye” after every event as it points to thegovernment program, “which isn't working very well.” The governmenthas a role but it must allow the private market to enter and createsolutions.