Insurance News

Insurers bear responsibility for market swings: Exec

Posted on: March 10, 2010

WASHINGTON?Insurers have themselves to blame for market swings, an insurer CEO told an agents? meeting Friday in Washington.

Insurers ?have to be honest? and admit that, said Michael LaRocco, president and CEO of Allianz of America?s Novato, Calif.-based Fireman?s Fund Insurance Co. ?It?s bad behavior,? he said, adding that insurers should price their products to earn an underwriting profit.

The current cycle is about seven years old, and cycles generally last several years longer than that, said Tom Motamed, president and CEO of Chicago-based CNA Financial Corp. He said insurers have a long way to go but added, ?I think companies are starting to push to get rates up.?

The comments came during a CEO panel discussion at the Alexandria, Va.-based Independent Insurance Agents & Brokers of America?s annual legislative conference and convention in Washington.

Regarding regulatory reform, the real regulatory question facing insurers is not state vs. federal regulation, but rather finding a ?common-sense? approach to regulation, said Mr. LaRocco.

?What we want is a much more efficient system,? he said.

Other panelists stressed the same pragmatic approach, although CNA?s Mr. Motamed stressed that he believes state regulation has its advantages, notably consumer protection. ?We think it works,? he said, adding, ?I?m not a supporter of big government.?

Another speaker, Hartford Financial Services Group Inc. President, Chairman and CEO Liam McGee, said property/casualty insurers do not present a systemic risk to the economy. Therefore, they should not be subjected to the same kind of systemic risk regulation that Congress wishes to impose upon banks.

?We do not believe we are a systemic risk,? said Michael Hughes, president of Liberty Mutual Group Inc.?s Seattle-based SAFECO Insurance Co. of America unit.

Robert Rusbuldt, president and CEO of the IIABA, moderated the discussion.

During an informal press conference after the panel, Mr. LaRocco said he is ?cautiously optimistic? that the federal government?s terrorism risk insurance backstop, which the Obama administration wants to scale back, will remain intact. But given concerns over the deficit, ?nothing will be off the table,? he said.

Copyright © 2010 Crain Communications, Inc.

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