ACE’s Greenberg: Industry Shouldn’t Be So Quick to Turn to Government for Help

NEW YORK — To remain relevant in a changing world, insurers must assume relevant amounts of risk in areas that matter to clients and resist the temptation to accept government involvement in difficult areas, according to ACE CEO Evan Greenberg.

Speaking here Friday at an Insurance Federation of New York (IFNY) luncheon, where he received the Free Enterprise Award, Greenberg said, “We are expected to innovate in areas where exposure is being created. Risks such as terrorism, cyber risk and flood insurance all come to mind.”

He noted that insurers can only take risk to the extent that they understand it and have the balance sheet wherewithal, but he added, “With that said, we shouldn't be so quick to expect and accept government involvement, which should be limited to extreme and systemic-type events truly beyond the industry capabilities.”

Greenberg continued, “And our capabilities are evolving, and they are growing, and they will continue to do so.”

New York Department of Financial Services Superintendent Benjamin Lawsky concurred with Greenberg to a large extent, stating, “Whenever possible, government should stay the heck out of the industry.” 

He said government-run programs should be limited, where possible, and indicated problems experienced in these programs reflect badly on private insurers. Pointing to the National Flood Insurance Program as an example, Lawsky said, “It did not perform well after Sandy. It ran way behind the private insurance industry.”

He added, “The problem is, the poor performance of the NFIP, in my opinion, for regular consumers, they just blamed the insurance industry.”  

However, Lawsky said terrorism—in particular nuclear, chemical, biological and radiological attacks—is an exceptional risk that the industry will likely never be able to properly model, and he said the Terrorism Risk Insurance Act should not only be renewed, but made permanent.