Bremer Tells Brokers: Not Enough Troops In Iraq

"We never had enough troops on the ground. I think that is a major reason why the security situation is still unsatisfactory," said Mr. Bremer, a career diplomat who chaired Marsh's crisis consulting practice prior to his appointment to head the CPA.

He said that despite the problems in Iraq, past and current, the need for regime change was necessary to prevent the possibility that one day suspected weapons of mass destruction could be passed onto terrorists by Saddam Hussein. "I have no question in the justice of our war," he said.

On terrorism in general, he gave a sobering assessment of the future of the war on terror. The face of terrorism is very different from that practiced in the 1960s through the 1980s, when terrorists showed some self-restraint by not pursuing attacks involving massive casualties, and their aim was primarily to draw attention to their cause, according to Mr. Bremer. The terrorist attacks of Sept. 11, 2001, however, "showed the ugly face of the new kind of terrorism we face."

This new brand of terrorism, he continued, is at war with the non-Muslim world. It is a violent revolution that seeks to overthrow the Western world and establish their vision of Islam as the world's dominant culture. They are, he said, motivated "by a hatred of the West" and its culture.

"These terrorists are prepared to die for their vision and are not deterred by the threat of prosecution. There is no negotiation possible," Mr. Bremer observed. "We need to confront them wherever we can."

When asked about Mr. Bremer's comments on the future of terrorism, Mark L. Ricciardelli, group president and chief executive officer of Alea a Bermuda-based insurer and reinsurer said smart insurers are paying close attention to the issue and are continually refining their exposures in the face of it. However, terrorism has lost "some velocity" in importance since 9/11, he said.

Charles M. Kavitsky, president and CEO of Allianz subsidiary Fireman's Fund Insurance Company in Novato, Calif., said terrorism is a clear challenge for insurers, for which underwriters need to be prepared. He said he hoped the war on terrorism would not turn out to be multi-generational, and that everyone involved is doing everything that can be done to prevent another event such as 9/11.

While Mr. Bremer's remarks made national headlines, the talk at the CIAB conference focused on the state of the market, rattled by four major hurricanes causing over $20 billion in insured losses. In interviews and informal conversations, executives were reluctant to use the term "soft market," despite a big slowdown in rate hikes, and big rate declines in some casualty lines.

However, experts here agreed that despite the recent spat of hurricanes in Florida and other costly natural disasters throughout the world, a return to hard-market conditions was not in the cards anytime soon.

Mr. Ricciardelli of Alea said the four hurricanes in Florida and typhoons in Japan will have serious effects on second-half insurer earnings, although how much is still in doubt. However, he added, these events "should serve as a wake-up call" that will dampen some of the downward pricing pressure the market had been experiencing.

Carriers have not had enough time to recover from the extended soft-market conditions of the 1990s, he went on to say. There are also pressures from the financial markets, which expect more adequate returns on their insurance holdings.

Mr. Kavitsky of Fireman's Fund said that changes in regulation, improved data and the influence of experienced capital investment would combine to keep the industry on its moderating course in pricing.

Since the 1990s, insurers have worked to better diversify their risks and have more information about what they underwrite. He continued that with more data, the industry can refine the underwriting of specific risks and not rely on the market as a whole to improve the bottom line. "There will not be a soft market like we once had," said Mr. Kavitsky, noting that the industry's dynamics have changed, in that insurers price independently from what their competitors are doing.

"I don?t think [a soft market] is going to happen," he said. "Insurers are not a bunch of lemmings who will follow one another on pricing."

For their own individual companies, Mr. Kavitsky said that since taking over in May of this year, he has sought to foster an environment where executives think outside the box and to create a product that will be easier for independent agents to access. An example of that approach is Fireman's Fund's recent decision to use one deductible on claims from the four Florida hurricanes a move made after careful research and consideration.

Alea's Mr. Ricciardelli noted that with the advent of new technology, data has become more readily available, and this contributes to market stability by aggregating information about risks and making Alea a more knowledgeable underwriter of the small and midsize specialty markets it covers. "We take a simple approach to business," he said. "We only do businesses that we know, understand and can analyze."

Reproduced from National Underwriter Edition, October 7, 2004. Copyright 2004 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.