FORUM

Market Trends

A New World of Opportunity

Jan 10.2012 |

We live in a world of continuing crisis and upheaval in the physical world, economics, politics and social infrastructure – a world of threat and uncertainty. The insurance industry thrives on managing risk and uncertainty, but only if it can use its skills to price the uncertainty. The International Insurance Society’s 47th Annual Seminar in Toronto, June 19-22, 2011 provided many examples of opportunities for the insurance industry to leverage today’s uncertainties into new business opportunities. Most of the seminar content is available for review on the IIS website.

Inflation and Insurance

Oct 03.2011 |

Because of the long term nature of insurance contracts, pricing, reserving and investment policy are very sensitive to inflation trends and experience. We are currently living in a low and relatively stable inflation environment. The industry is generally able to adapt to inflation changes that occur in gradual cycles with limited peaks and valleys. It is the sudden movements that create the problems. Although the industry has survived through rapid movements and extremes in the past, most of the current generation of insurance people do not have experience with operating under high inflation conditions. As we anticipate an eventual economic recovery, we should expect a return of higher inflation rates. Depending on the progress of recovery, and government stimulus actions, we need to be prepared for a range of higher inflationary scenarios.

Economic Crisis

The Impact of the Economic Crisis on the Insurance Industry

Considerations:

1. How have the economic crisis and aftermath affected insurance lines, e.g., higher claims, decline in sales, growth in sales, new products?

2. How has the experience in financial services affected the direction of insurance regulation? Is insurance regulation affected by mistaken assumptions about industry needs and norms, e,g., excessive restriction on the use of needed hedging facilities?

3. How will the recent experience change risk management practices in the industry?

4. Will problems in the derivatives markets reduce or change the use of capital markets for insurance activities?

5. What new market opportunities are created by the recent crisis?