||Tuesday, May 1 2007|
State of the Industry
Insurance Leaders Gather at RIMS
Tuesday, top executives from pre-eminent insurers and brokers discussed the state of the insurance industry with attendees at the CEO Leadership Panel Luncheon. Led by moderators and former RIMS Presidents Roger Andrews, Ronald Stasch and Stephen Wilder, the panel included John Amore of Zurich; Gregory Case of Aon; J. Patrick Gallagher, Jr. of Arthur J. Gallagher & Co.; Evan Greenberg of ACE Limited; Brian Storms of Marsh Inc.; Shivan Subramaniam of FM Global; and Martin Sullivan of AIG.
Independent insurance consultant Myron Picoult opened up the session running through nine hot topics including first quarter results, the need for leaders, dead wood on boards of directors, depth on the management bench, customer service, information technology improvements and more effective capital use.
Questions from the audience then began, starting with a query about the use of catastrophic models and increased pricing after Hurricane Katrina.
"Models don't predict disasters," said Subramaniam. "As time goes and we test them they will get better. But I'm not quite sure that is what led to pricing increases. A lot of people's balance sheets got devastated and they had to do something about that."
Addressing the issue of quality in the industry, Gallagher responded to an issue he has "railed upon" often. "It's amazing when you step back from an industry like ours and realize that the quality stinks," he said. "The problem is that the definition of quality is very traditional. The driver of quality is you, the risk management community, and it’s very individual in nature. What is important to one risk manager will not fit them all."
Diversity is an issue that all the executives acknowledged as vital, addressing within their organizations in subtly different ways.
"When you think about talent, diversity is a critical building block to that," said Case. He said that the industry should emphasize the kind of impact it can make when recruiting, in order to attract the attention and excitement of the top young candidates.
The topic of supplementary commissions was a hot issue, and Greenberg's response drew a crowd ovation.
"I think there is an issue of a conflict of interest," he said. "It may create more transparency, but transparency does not eliminate conflict. If it's a broker, I don't think there are contingent forms of payment, unless it's between the broker and the client and the client is paying. Otherwise you are establishing that conflict. And frankly, it is a little cynical to me, given what the industry has just gone through in the last few years."
"This is a big issue and not an issue that is best described in sound bits on a panel," Storms said. "We and many others are making significant investments in our industry and there is a cost to doing that and that cost has to be shared. It's a matter of how we are going to share the costs."
Meet the Press
Risk managers got unprecedented access to the trade media as Sam Friedman (editor-in-chief of National Underwriter), Jack Roberts (editor-in-chief of Risk & Insurance), Bill Coffin (publisher and editorial director of Risk Management Magazine) and Regis Coccia (editor of Business Insurance) discussed how risk managers can have a more productive relationship with the press.
Roberts spoke on the rules for attribution when speaking to reporters, noting that the time to determine whether comments are on or off the record is before the interview even begins. Coffin said that for risk managers, getting into print either as a source or as a writer is a great way to highlight their own expertise as well as bring greater awareness to the discipline of risk management itself.
Coccia detailed the upside of dealing with the media proactively, while Friedman offered some insights on how handling the media poorly can only make trouble for companies in the public eye. Both spoke about cases in which sources tried to expunge publicly-made comments from media coverage, or companies that refused to engage the media, thereby driving publications to speculate about them. "This was a great session, and I hope we will see it again next year at RIMS," said one attendee. "I think that this kind of discussion is very helpful to risk managers and media relations professionals alike."
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