A quartet of top insurance executives considered the state of the industry during a panel discussion held during Independent Insurance Agents & Brokers of America (IIABA) Legislative Conference & Convention.
One question the executives pondered was the impact of the economy on the insurance industry. The Hartford chairman and CEO Liam McGee argued the insurance industry’s health will mirror the economy at large.
“We will see some stability with some improvement in the economy,” McGee said. “We will see a more rational pricing environment in the long term, but I don’t think we’ll see growth rates for quite some time like we’ve been accustomed to.”
The subject of pricing was another topic of discussion. Michael LaRocco, Fireman’s Fund president and CEO, said as carrier get more adept at pricing, profits will improve.
“There will always be some movement in cycles, but what you’re seeing in personal lines is the gradual elimination of the cycle because companies know how to match rate to risk and are able to quickly respond, raise rates and maintain profit margins,” LaRocco said. “In commercial lines, we can do much better than we are today. We have to begin to show some discipline as an industry.”
The fractious regulatory environment also elicited some strong views, with executives stating the financial crisis was not justification for radically revising the way insurers are regulated.
“The state system has worked because the business is local,” Tom Motamed, CNA chairman and CEO said. “People in (local) jurisdictions know more about what’s going on than people in Washington who have never been to those places.”
Safeco president Michael Hughes added that legislators look to craft laws to regulated systemic risk, insurers should be treated differently from others financial services firms.
“What’s very clear to us is that we do not believe we’re a systemic risk or that we should be part of that,” Hughes said.