New York A group of chief executives said they are optimistic that the industry will remain in good financial shape, and one said he is hopeful the industry will soon see some moderation in the soft-market cycle.
The comments were made on Sunday during a chief executives panel discussion at the Alexandria, Va.-based Independent Insurance Agents & Brokers annual meeting here.
"I'm a big optimist," said Fredrick H. Eppinger, president and chief executive officer of Allmerica Financial Corporation, based in Worcester, Mass., discussing the industry.
The electronic information age has given insurers more data than they have ever had in the past, allowing them to take on risks "with their eyes open," he said. There is some concern, however, to the balance sheet over some issues, such as asbestos, he noted, but experience and leadership he hoped would mean "more temperate cycles in the future."
However, Robert J. Joyce, chairman and CEO of Westfield Group, based in Westfield Center, Ohio, noted that while company fundamentals remain strong, current catastrophes, such as Katrina, could put some pressure on pricing.
Charles M. Kavitsky, president and CEO of Fireman's Fund, based in Novato, Calif., said the main issue is to keep "sanity in the marketplace" noting that "some lines are softer than they should be."
He said recent legislation, such as Sarbanes-Oxley reporting standards have made it even more incumbent on CEOs to understand their business and its fundamentals.
"If you do something wrong, you will go to jail," he said.
Axel P. Lehmann, CEO of Zurich North America Commercial, based in Schaumburg, Ill., said there has never been more uncertainty in the marketplace and praised the role of raters who are looking closely at insurers and putting pressure on them through ratings.
"That is a good thing," he remarked.
The CEOs felt that the issue of catastrophic risk is beyond what the private market can handle and needs to be discussed at the national level.
Mike McGavick, CEO of Seattle-based Safeco said the country need think about where many Americans live, noting that a large segment of the population lives in coastal areas subject to hurricanes or earthquake zones.
"This is a crisis coming," he said.
"It is not just an insurance issue, but a national issue that needs to be taken on," said William J. Mullaney, president of MetLife Auto & Home, based in Warwick, R.I., echoing Mr. McGavick's concerns.
Related to the issue of market risk, Mr. Kavitsky said that the Terrorism Risk Insurance Act (TRIA) must be renewed. He said that there was no way the insurance industry would be able to withstand the losses from a significant terrorist attack. He added that the industry must push for passage of renewal of the act.
"This is a challenge for us," he said. "We can't stop working for passage. We have got to keep pounding on this issue."
From a global perspective, Mr. Lehmann said this is an issue the world has not thought deeply enough about, or is doing enough to address the overall risk exposure for the industry.
"No one is leading on this issue in the industry," he said. "This is beyond what we can do as individual companies."
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