13 September 2012

Insurance industry must take client-focused approach to emerge from current storm, says Michel Liès

The risk transfer industry is in the 'eye of a storm' and must change the way it does business towards a more innovative and client-focused approach in order to emerge from its current predicament in better shape, said Michel Liès, Group Chief Executive Officer at Swiss Re.

At a PWC breakfast gathering he told leading lights from the industry that it must speak with one voice and better communicate its value to society to help ensure that regulators and key decision makers do not lay down laws that will stifle the role insurers can play in the global economy.

Weak growth in mature markets and a slowdown of growth in emerging economies such as China, huge nat cat losses in 2011, historically low interest rates, extremely volatile capital markets and tightening of regulation following the financial crisis have created a ‘rarely seen’ set of challenges for the insurance industry, began Mr Liès.

The current storm faced by the industry has meant that premium growth has stagnated and profitability is down, he continued. Sufficient rate increases are not yet coming to its rescue, he added.

Achieving the ‘robust’ price increases that he believes are necessary to steady the ship will not be easy, he conceded. “Overall the conditions are improving but insurers cannot afford to just wait until the tide rises. Companies will have to improve profitability by more proactive measures.”

One such measure involves changing the fundamental way in which it does business. A shift from the current product-based approach towards a more innovative and client-focused offering is a key to success, he continued.

In order to meet its challenges the risk transfer industry must better argue its case and learn to speak with one voice to help shape its own future, said the Swiss Re chief.

Although global economic growth has generally slowed, opportunities remain for the risk transfer industry to expand its reach and service more risks, he continued. “There is plenty of growth opportunity, although if we are restricted to the way we do business this will obviously be more challenging”, said Mr Liès. “The growth is there, the challenges are there and we are in an industry that has a fantastic experience of facing challenges in the interest of our clients and society.”

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