The International Insurance Society claims to be the largest multinational organisation of its kind, with almost 1000 members from more than 90 countries. Ahead of his keynote address at the British Insurance Summit, president and chief executive Michael Morrissey answers questions on the most pressing issues of the day.
How would you sum up the insurance industry's response to the global economic downturn during the past three years?
Very impressive, in terms of meeting policyholder needs. As far as I know, no legitimate insurance clam has gone unpaid. Investment portfolio losses — some of which were unrealised and have already regained value — certainly hurt insurers but, as an industry, the performance was notably better than that of banks, investment firms and mortgage lenders.
Is there still a danger the insurance industry will ultimately pay the price - in terms of extra regulatory burden - of mistakes by the wider financial services sector?
I'm afraid so. Although insurance companies didn't cause the crisis, many regulators and
legislators want to lump them in with banks and investment funds. This is over-simplistic and misguided. Insurance regulation worked, and industry capital proved adequate, except for a very few cases where insurance holding companies had problems emanating from noninsurance units.
Will we see a rise in crossborder regulation, with new super regulators overseeing larger areas such as Europe or Asia?
It remains to be seen whether the model that evolves is truly cross-border, or rather regulatory convergence and better cooperation between regulators from different jurisdictions. There will be some broad regional standards - the European Union, for instance - but it is not likely we will see a super regulatory body.
With the introduction of Solvency II in Europe, do you think insurers in this continent
will have an advantage come 2013? Do you expect other non-EEA countries to introduce
similar regimes in terms of capital solvency, to create wider harmonisation?
Solvency II is important, and most probably will work for Europe, but it is not necessarily
best for everyone. Canada and Australia have very robust systems, for example, and
the Solvency Modernization Initiative in the US appears superior to Solvency II in some
ways because it is less modeldriven. But in the end, yes, there will be greater harmonisation or equivalency between regulatory regimes.
What do you see as being the biggest challenge facing insurers during the next one to
After a period of prolonged economic stagnation in the USand Europe, featuring historically low interest rates, the main challenge is findingaway to resume revenue
growth. Capital is adequate, and policyholder interests are being protected. But with flat revenues, returns on the industry's invested capital are anaemic.
Looking longer term, what will be the biggest challenges in six to 10 years?
While industry capital appears ample at the present time, the growth of the global economy over the long termwill require a great deal more in financial resources
from the insurance industry to provide adequate coverage. The industrymust improve its returns to attract the capital needed.
Where do you see the biggest opportunities for the global insurance market over the next five years?
I'm not the first person to say this, but Asia clearly has the greatest growth potential -
both for regional companies and for international insurers. The insurance business grows best where people and companies have increasing income streams and assets to protect. And that is happening on a very large scale across Asia.
Cities like London and New York are still seen as the globe's preeminent insurance markets. Will they ever be usurped, or can they continue to play a leading role?
London and New York will remain very important, but the insurance industry no longer
has a bipolar power structure. Bermuda has already emerged as a vital jurisdiction on the world scale; the top European insurers and reinsurers are powerful; and Asia is retaining more of its locally generated business in the region. So places like Singapore will be among the global leaders within the next decade.
Insurance is often viewed as a career people fall into rather than chose. Do you believe this is changing?
Talent attraction and exciting-career opportunities. Yet it suffers from a bland image
that attracts too few of the best and brightest. We have not been effective in presenting ourselves or career opportunities to young people. It is changing, but slowly.
Likewise the insurance sector is not seen as particularly innovative sector, reliant instead on tried and tested technology, systems and practices. Would you refute that?
This is another facet of the industry's weak public relations. Of course insurance isn't as visibly innovative as some technology or consumer products companies but, in serving and anticipating policyholder needs, the industry has done very well. From new kinds of coverages to new modes of distribution, many examples of innovation and creativity abound. But they don't get media coverage like the newest Apple gadget.
Do you think the insurance industry would benefit from welcoming moremanagers from other industries into its ranks?
More senior executives have been brought in from other industries in recent years than ever before. To my mind, the jury is still out on whether this has been greatly beneficial or not. For instance, to look at the recent performance of most major banks, it's not a certainty that more bankers are what the insurance industry needs. Of course, there have been many successful marketing, IT and other executives that have joined the industry from the outside, and logically the number will keep increasing.
What advice would you offer young industry executives who may aspire to be inducted into the IIS Hall of Fame?
The Insurance Hall of Fame honour denotes not just major achievements by inductees, but outstanding contributions to the industry over a long period of time. The common denominator I see in its members is a lifelong desire to find newer and better ways to meet customer needs. Whether that spirit manifested itself in geographic expansion, new product development, more responsive marketing systems, or better customer service practices, they all achieved greatness by anticipating and responding to opportunities to help customers. When insurers hold to those priorities and values, growth and profits follow over time.
Michael Morrissey, president and Ceo of the International Insurance Society, will be giving the international address on the first morning of the British Insurance Summit on wednesday 22 September.Among the areas he will cover are the threats and opportunities facing the international insurance sector; future customer dynamics and what will make the best model for a market leadership; regulation, risk and capitalisation within the financial services vs insurance sector; and the global and uk political environment.
To book your place at the British Insurance Summit, visit www.britishinsurancesummit.com
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