Underwriters Hear A Call For More Discipline
By Mark E. Ruquet
NU Online News Service, Nov. 12, 11:04 a.m. EST, Orlando, Fla.? Executives addressing a gathering of underwriters told them the insurance industry's top management must do a better job making underwriting decisions or face another ruinous, prolonged soft market.
Their critical consensus of the industry's performance came during the 15th annual Professional Liability Underwriting Society's conference held here today and yesterday.
Michelle A Duffett, the Minneapolis, Minn.-based association's president, began the round of critical observations in her comments during the opening general session.
Ms. Duffett said the long history of pricing cycles has not been beneficial to companies. She observed that taking an underwriting profit "should not be a fad," and that the practice of "irresponsible competition" was hurting business and the bar needs to be raised "on our own insurance industry."
Underwriters, Ms. Duffett said, should "not take short-term opportunities and be wrong in the long term."
"We must commit to long-term goals," she concluded.
In an executive roundtable discussion, four company executives echoed her opinion.
Sax Riley, the outgoing chairman of Lloyd's, noted that the industry has been through a number of staggering disasters since the 1960′s, with the most recent being the destruction of the World Trade Center.
Mr. Riley said the industry, with the prolonged market shifts, is not underwriting risks properly. He added that the industry would need five years of combined ratio underwriting in the 90 percent range before the market can go through another market change.
"We have got to break the cycle in this industry," said Mr. Riley.
"We have got to restore professionalism at the management level," said Brian Duperreault, chairman and chief executive officer of Bermuda-based insurer ACE Ltd.
Joining in the call for more professionalism in the upper management circles of the industry were Dinos Iordanou, chief executive officer of Arch Capitol Group Inc., based in Bermuda, and John Keogh, president of National Union, a subsidiary of New York City-based AIG.
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