Summer means it's time for another hurricane season. The insurance industry hasn't faced a heavy storm season in several years and Howard Mills, director and chief advisor for the insurance industry group at Deloitte, believes carriers have been able to adequately build up their reserves in preparation for the next big storm.
"The insurance industry is very well positioned," says Mills. "Risk management is their business and their performance throughout the economic crisis demonstrated they are doing a good job at risk management. Reserves are at a very good place, especially the property/casualty industry."
(Mills and Tech Decisions editor in chief Bob Hyle discussed risk management issues in a podcast that can be found by clicking here.)
Mills maintains insurers are prepared for catastrophes with adequate reserves to cover losses and will be ready for business interruption claims if there is an active catastrophe season.
"We've had seasons where we predicted a lot of Cat activity that didn't occur, but we've seen nothing of a scale like Katrina, so the industry has had a few years to build up their reserves," says Mills.
Mills also believes insurers are managing their exposure and looking at their operational experience through the economic crisis.
"Investment earnings took a huge hit so we saw a lot of companies looking at their operational excellence, trimming their costs, and adopting stringent risk-management procedures," he says.
Carriers are now looking at growth opportunities.
"Organic growth is difficult for many insurers, so they are looking through acquisition or new product development," says Mills. "They've come through the crisis well and managed their risk well. The insurance industry has a great story to tell in terms of risk management and responding to the economic crisis better than other sectors of the financial services industry."
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