One of the story lines emerging from this year’s Rendez-vous de septembre in Monte Carlo was the continued relevance of P & C insurance and reinsurance. At first, it sounds a bit overdramatic, but there is something to it.
The continued relevance of the P & C industry was first questioned in 2012 by XL Group’s CEO Mike McGavick in an Insurance Journal article. Many of his points were centered on the relationship of insurers and reinsurers with other global industries, including their access to capital. The one point from this three-year old article that resonated for me is this:
As another example McGavick noted that following the floods in Thailand the price of computer chips rose by 10 percent. But the P & C industry’s response hasn’t been to offer solutions. It’s mainly been to impose sub-limits or to exclude it entirely. [McGavick] warned: “We cannot exclude our way to prosperity, and we cannot sub-limit our way to relevance.”
From a P & C executive, a CEO no less, those are fighting words, a rallying cry. Unfortunately, Mr. McGavick was viewed more as a Cassandra (to use IJ’s description) than a Henry IV.