President of ACE European Group, Andrew Kendrick, set out his vision for the future of the European insurance industry as he addressed delegates in a keynote speech to The Economist Insurance Summit in London.
Speaking to almost 200 insurance industry chief executives and senior management, Andrew Kendrick set out a five-point strategy for the industry to support its customers through economic recovery, while continuing to navigate challenging conditions in which competition has intensified, new premium growth remains difficult and lower investment returns have impacted industry returns.
The five points are:
Sustainable underwriting
“The easy strategy for attracting new business in the current market conditions is to reduce underwriting discipline. But history proves that this is financial suicide. This time will be no different. Insurers need to understand that lower investment returns have reinforced the need for underwriting discipline as the only route to long-term performance. They also need to take more accountability and responsibility for their own pricing decisions.”
Data discipline
“Underwriting discipline has never been more important in driving insurer returns. But to this we must now add a new mantra if we are going to capture the opportunities of our information-rich world: data discipline. Insurers need to make transformational changes about how information is captured, analysed and applied. There are ways of tackling those changes in a manageable way which could revolutionise our industry as we approach 2020.”
Investment in emerging risk solutions
“The crisis has elevated the importance of risk management. Many risk managers are now being asked to provide greater insight into non-traditional areas and demand for solutions for emerging risks is likely to increase as the business agenda turns to investment. Our Emerging Risks Barometer highlights four areas where at least 40% of UK businesses expect the financial impact to rise in the next two years. These are environmental, cyber, D&O and supply chain risk. All are areas in which the insurance industry should invest further as we approach 2020.”
An international outlook
“I believe that tomorrow’s successful insurers will be those who can demonstrate that they follow their customers on their increasingly international journey. Managing risk across borders is increasingly important for companies of all sizes. Working with clients to navigate this and to develop robust multinational insurance programmes is rarely simple. But it is vital if the insurance industry is to support its customers in their recovery.”
A client-centric approach
“The insurance industry has avoided the egregious excesses seen elsewhere in financial services. But for too long we have taken our customers for granted. We need to get in tune again with what they expect–and invest in service and relationships. We need to make things more transparent. And we need to communicate more– nd do it better.”
In conclusion, Kendrick said:
“As we support our customers through the recovery and the new G20-led world of trade, there is a real sweet spot of opportunity for insurers and brokers who can add value on emerging and multinational risk solutions.
“And, as we consider the rehabilitation of UK financial services, let’s not forget our own opportunity: to refocus on service and transparency. If we can achieve that, I believe that by 2020, insurance will be better recognised as the honourable and client-focused industry that it is and must continue to be.”
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