Deputy chairman Graham White urges industry to focus on underwriting at MultaQa Qatar
Underwriting discipline will be key to the (re)insurance market’s success in 2011, Lloyd’s deputy chairman Graham White, told delegates at the fifth annual MultaQa conference in Qatar today.
White said that notwithstanding the ongoing tragedy in Japan: “There is no moral or financial value in waiting for a market turning event - we must always look to be better.
"This is a moment of opportunity to get back to basics. If rates are low and investment income is hard to come by, then a clear spotlight focuses on underwriting.”
Underwriting must turn a profit
White said that the property and casualty (re)insurance industry has made an underwriting profit just five times since 1975, adding: “An entire generation of underwriters has grown up working in an environment where it is not necessary to derive a profit from underwriting. Well – it is now.”
Brokers should focus on security, not price
White also urged brokers to act responsibly by looking for stability when placing business, rather than opting for the lowest rate. “In the insurance market, as in the supermarket, you get what you pay for,” he said.
“Mutton never tastes quite as good as lamb. Insurance buyers want security – at Lloyd’s, we make it our aim to deliver that.”
Insurance isn’t banking
White said the three main challenges facing the market this year were: continuing soft rates; low investment returns; and the danger of excessive regulation.
He warned: “Insurance is not banking, but we still find ourselves uncertain whether we will get tied up in the new regulations designed to curb the excesses of the banking system. We must ensure we are regulated as insurers, by people who understand the needs of the insurance community.”
Gender ban “disappointing”
White also condemned the recent decision by the European Court of Justice to stop insurers using gender as a factor in pricing.
He said: “The key [to stability in the market] is the accurate pricing of risk. The recent ruling by the ECJ which prevents insurers from using gender when pricing risk is very disappointing. Motor insurers will no longer be able to quote a higher premium for young male drivers than for young female drivers – even though the latter pose a higher risk.”