David Sampson, president and CEO of PCIAA, opened this year’s conference with a promise to defend the property and casualty insurance industry against evolving regulatory risks.
“Competition makes our companies more innovative and efficient. We must work against regulatory overreach, which might hinder the development of our market.”
Sampson identified a number of emerging risks that early insurers would never have imagined—terrorism, political and credit risk— but insisted that regulation is a larger threat still to insurers in the near, mid and long term.
In the near term, Sampson identified the constantly resurfacing restrictions to underwriting tools in US state legislatures in addition to legislative changes following Hurricane Sandy, which altered the way insurance contracts could be executed.“We continue to be up against a rising tide of regulation that would undermine insurance contracts,” said Sampson.
In addition, the current debate in Congress over the renewal of TRIA could negatively impact the property and casualty market should the US government allow the legislation to expire. As Sampson explained: “The fact that we are meeting within walking distance of the location of the Boston marathon bombing is a sobering reminder of the possibility of terrorist attacks. The loss of TRIA protection threatens the solvency of our companies.”
In the mid-term—“known unknown” risks in Sampson’s words—political concerns are a major focus. “A move away from risk based pricing towards imperatives driven by ideological points of view would wreak havoc on certain segments of the insurance industry.”
Long-term risks, referred to by Sampson as “unknown unknowns”, centre around global regulatory convergence. Increasingly, Sampson argued, the Financial Standards Board is setting itself up as the “arbiter of global regulation”. The position of the US government, Sampson said, is unclear.
"COMPETITION MAKES OUR COMPANIES MORE INNOVATIVE AND EFFICIENT. WE MUST WORK AGAINST REGULATORY OVERREACH, WHICH MIGHT HINDER THE DEVELOPMENT OF OUR MARKET."
In addition, Sampson said: “We must recognise the real threat of bank-centric regulation and work to make sure that this does not disrupt a highly vibrant us insurance market that allows companies to innovate and thrive.”
He continued, “What’s important is how we respond.” PCI, Sampson said, is well positioned to lobby for the interests of the property and casualty insurance industry. He explained: “Let me assure you that PCI does not have modest aspirations when it comes to helping you deal with emerging regulatory threats.”
As he concluded, “Our industry has endured fires, natural catastrophe, boom and bust economics and regulatory changes. The next few days will help us devise strategies for how to survive in an increasingly complex world.”
PCIAA, Boston, conference, insurance, reinsurance, US