Insurance industry must take client-focused approach to emerge from current storm-Michel Liès

At a PWC breakfast gathering he told leading lights from the industry that it must speak with one voice and better communicate its value to society to help ensure that regulators and key decision makers do not lay down laws that will stifle the role insurers can play in the global economy. Weak growth in mature markets and a slowdown of growth in emerging economies such as China, huge nat cat losses in 2011, historically low interest rates, extremely volatile capital markets and tightening of regulation following the financial crisis have created a ‘rarely seen’ set of challenges for the insurance industry, began Mr Liès. The current storm faced by the industry has meant that premium growth has stagnated and profitability is down, he continued. Sufficient rate increases are not yet coming to its rescue, he added.hide“Whilst industry profitability is not expected to improve rapidly the current rate increases are insufficient to offset past declines and low investment yields. After years of substantial reserve release reserve adequacy has deteriorated…a shift to negative development is likely,” said Mr Liès. Achieving the ‘robust’ price increases that he believes are necessary to steady the ship will not be easy, he conceded. “Overall the conditions are improving but insurers cannot afford to just wait until the tide rises. Companies will have to improve profitability by more proactive measures.” One such measure involves changing the fundamental way in which it does business. A shift from the current product-based approach towards a more innovative and client-focused offering is a key to success, he continued. “I don't think we can stick to the way we have done business up till now taking into account the challenges we are facing. The opportunities are there but they are not as easy as they would have been ten or twenty years ago,” he said. Traditionally the insurance industry has taken a product-orientated approach but the real focus should now be on providing innovative solutions that clients want, he argued. “To listen to the clients, to engage them and put ourselves in their shoes is certainly the right way to go. The challenges I spoke of earlier and the changing risk landscape are not just affecting our industry, they are also relevant to society as whole. Insurance can play a very broad role in such challenging times.” In order to meet its challenges the risk transfer industry must better argue its case and learn to speak with one voice to help shape its own future, said the Swiss Re chief. The Monte Carlo Rendez-Vous is one such platform with which to achieve this goal, he added. “[Its is an opportunity] to increase the voice of the insurance industry, to explain the role of this industry and the difference between this industry and others in the financial services sector, to inform people who are making decisions about the way this industry is regulated so they can understand all of these aspects before making decisions that are probably not the most logical from a global economic perspective,” effused Mr Liès. Although global economic growth has generally slowed, opportunities remain for the risk transfer industry to expand its reach and service more risks, he continued. “There is plenty of growth opportunity, although if we are restricted to the way we do business this will obviously be more challenging,” said Mr Liès. “The growth is there, the challenges are there and we are in an industry that has a fantastic experience of facing challenges in the interest of our clients and society.”

Insurance industry must take client-focused approach to emerge from current storm-Michel Liès

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