Distinctions between the re/insurance industry and the capital markets are disappearing.

In Stockholm, at the IUA's 1999 International Seminar, a delegate pointed out that excess of loss had once been beyond the scope of conventional underwriting. When he started out in the business in the 1970s, he said, many people regarded this type of reinsurance as a challenge to the old established way of doing things. Today, of course, it is part of the staple fare of what we offer.

I well remember the first lunchtime briefing on insurance derivatives, organised in 1995 by one of the IUA's predecessor organisations, LIRMA, and delivered by consultants who had worked in the area since the 1980s. Although some in the audience had understood every word, the topics being described were new to most of those present, whose faces betrayed feelings of bewilderment and incomprehension. Six years later, many of the techniques that we discussed on that occasion are beginning to enter the mainstream. Finite risk, for example, now barely qualifies as ‘alternative'.

When I was a broker in the 1980s, a number of organisations were beginning to experiment with what came to be known as Alternative Risk Transfer (ART). Some pulled back, believing the subject to be fringe and over-technical, and were later to regret their decision.

Although a loose and ill-defined concept, ART was – and still is – frequently to be found in the borderland between the capital markets and re/insurance. The trade credit and political risk arena, where I was involved for several years, is a good example. The risks with which we were dealing could, given a bit of repackaging, have been treated using banking products.

Since then, the number of transactions that fall into this borderland has risen substantially, if not yet as dramatically as some were predicting a few years ago. Their importance is certain to grow as organisations seek to protect themselves against new types of risk, and to find new ways to cover old risks. When people talk about innovation in our industry, this is where much of it is to be found.

At this year's Gleneagles seminar we are fortunate to have eminent speakers whose organisations are at the forefront of designing many of the new risk-handling techniques – companies that see no real conceptual distinction between the capital markets, insurance and reinsurance.

Of course, more conventional types of cover continue to dominate in many parts of the world. Our customers outside North America, Western Europe and Japan are, by and large, content to buy insurance and reinsurance products that may evolve slowly, but change little from year to year. Nonetheless, it is becoming increasingly difficult for global reinsurers to operate without at least an understanding of the latest techniques and how they are being employed.

In an ever more customer-driven industry like reinsurance, the ability to respond to the needs of the buyer – whether they be for traditional or new types of cover or for a combination of the two – and to offer flexible, more sophisticated solutions will deliver competitive advantage and greater opportunities.

Providing a seamless customer-driven service across the continents is not as easy as it should be for members of the International Underwriting Association. The variety of different forms of national regulation are a significant barrier to free trade in what should be a wholly international trade, as are the lack of truly internationally-accepted accounting standards.

At the Stockholm seminar, Dr Arend Vermaat, vice chairman of the International Association of Insurance Supervisors (IAIS), warned that the convergence of different types of financial services would inevitably mean a parallel convergence of supervision. A number of organisations, including the IAIS, the International Organisation of Securities Commissions and the Basel Committee have already been working together for over five years on this.

We welcome the harmonisation and transparency that this should bring, but we shall oppose the heavy hand of unnecessarily burdensome new regulation. We are working with other organisations internationally to promote simplification and effectiveness, and to oppose bureaucratisation.

These considerations are a long way from the issues that exercised delegates when the first of these seminars gathered in 1973, under the auspices of the Reinsurance Offices Association. In that respect, the Gleneagles event both reflects and hopes to contribute to the enormous change that is taking place in our industry.