Programs, Speakers Switched At CPCU Meeting

There were originally 79 guest speakers scheduled during the three-day event set to address 22 educational seminars and six general sessions. Two speakers cancelled and were not replaced; four had substitutes stand in for them and the CPCU Society recruited eight additional speakers to fill gaps at general sessions. All eight keynote speakers spoke as scheduled.

"Just throw away any handouts you may have picked up on your way in," Paul Picardo of Guy Carpenter & Co. Ltd. told the audience that had gathered for an educational seminar on the Global Challenges Facing Reinsurance.

What had originally been billed as an in-depth look at reinsurance with five corporate executives turned into a two-hour round table discussion on the challenges facing every aspect of the reinsurance segment of the market. Many of the speakers scheduled for the reinsurance seminar had been unexpectedly replaced when corporate executives were summoned to Washington, D.C., to help formulate a federal plan to assist secondary carriers.

Even the scheduled moderator of the reinsurance seminar was replaced at the last minute when Sandy LaFevre stepped in for Franklin Nutter, president of the Reinsurance Association of America. The reinsurance segment of the industry took on a disproportionate percentage of the losses from the attack on the World Trade Center, according to Joseph P. Brandon, chief executive officer of GeneralCologne Re.

"The insurance industry can handle this setback, but well need the help of the federal government if there is another similar event in the next four weeks," said Senior Vice President Tom Langley of American Re-Insurance Company, who sat in for Edward J. Noonan, the companys president and CEO.

Mr. Langley said his company estimated its pretax losses at $1 billion two days after the attack. That estimate has now been doubled to $2 billion, an amount that represents 11 percent of paid premium. In todays dollars, he said the one-day loss exceeds the companys previous record loss dating back to the 1906 earthquake in San Francisco.

The American Re executive drew the largest response from the audience when he half-seriously suggested that there might not be enough reinsurance companies left in business next year to formulate a Top 25 list of providers.

American Re has offices directly across the street from the World Trade Center in New York, but most of the executives were in Connecticut on the day of the attack participating in a company-sponsored golf tournament.

William J. OConnell III, the president of GE Reinsurance Corp., was in the World Trade Center the day before the attacks. His company suffered an estimated net loss of $600 million, plus the loss of one employee in the towers and another who was a passenger on one of the four doomed airliners.

Mr. Picardo, the Seattle branch manager for Guy Carpenter & Co., explained that providers must ask each client to assess its own individual exposure to terrorism before any agreement can be reached on the inevitable exclusions that will be a part of policy renewals. He was sitting in for Guy Carpenter Executive Vice President Geoffrey Bromley.

Guy Carpenter & Co. escaped without any fatalities on Sept. 11, but the company did lose an entire day of data in the rubble of the World Trade Center. Mr. Picardo said several days worth of information had been backed-up the morning of Sept. 11 and stored electronically at a remote location.

Herb Goodfriend, senior vice president of Gill & Roeser Inc., said he had just stepped outside for his second cup of coffee in the morning when he witnessed the second plane slam into the World Trade Center. "People talk about six degrees of separation," Goodfriend said. "But on this day there was no separation. There was a willingness to cooperate and communicate as a way of coming to grip with the events all around us."

Mr. Goodfriend quoted former New York Yankee Yogi Berra when he discussed the immediate future of the reinsurance industry: "When you come to a fork in the road, take it."

"What we need right now is help from the federal government, even if that means a loss of control," he said. "The industry wants, and needs, some regulation."

Mr. Goodfriend was thrown into double-duty during the CPCU conference in Seattle, being asked to also serve as a member of a panel on convergence. In that session, he predicted the terrorist attacks on New York and Washington, DC, would not hasten any companys rush down the aisle to forge a new alliances. "Convergence is on the bubble," he said.

Members of the panel on convergence agreed that there have been surprisingly few takers of opportunities for the transfer of risk provided by the passage of the Gramm-Leach-Bliley Act.

John T. Bailey, president of Swiss Re Capital Partners, added that he did not believe the terrorist activity would not change that outlook. Mr. Bailey and moderator Robert P. Hartwig, vice president and chief economist for the Insurance Information Institute in New York, each predicted that terrorist activity would stimulate an immediate investment into reinsurance carriers with hopes of cashing on short-term double-digit returns.

Dan Aznoff is the former editor of the National Underwriter publication Insurance West. He is now a freelance writer in the Pacific Northwest.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, November 5, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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