“The insurance industry [as a whole] already had a $30 billion underwriting loss in 2000,” said Pressman, highlighting the fact that the industry faced a challenge to achieve profitability even before the major losses incurred post-September 11.
Edmund Kelly, chairman of Liberty Mutual, echoed Pressman’s call for greater actuarial awareness: “There needs to be a fundamental change in the management of insurance business if it is to survive.”
But Alice Schroeder, managing director at Morgan Stanley and head analyst of property/casualty stocks, predicted: “Today’s hard insurance market will be a short-term cycle.” Saxon Riley, chairman of Lloyd’s of London, reacted with concern to Schroeder’s prediction, saying the industry needs to make underwriting profits for the next five years if it is to avoid major institutional bankruptcies.
A survey of the delegates of the Joint Forum Industry found that 91% believed the present hardening of the property/casualty market would continue through 2002; while 75% believed the pace of convergence between insurance and the capital markets will slow over the next year.
The week on Risk.net, November 17–24, 2017Receive this by email