Insurers Focus On Growth
The Age
Monday July 24, 2006
TERRORISM attacks and extreme weather have failed to put off insurance companies in their quest for growth.
Half of 148 senior insurance executives plan to enter new markets through acquisition or mergers, a KPMG survey says.Brian Greig, chairman of KPMG's insurance arm, warned Australian firms were at a juncture where they could maintain the discipline of recent years "or succumb to the historic temptations of growth above quality and trigger the onset of a soft cycle".But the survey said insurers acknowledged the importance risk management - almost two-thirds said it was "important" to how they managed their competitive position."But one of the biggest challenges for insurers is how they manage their global risk to combat the phenomenon of concentrations of risk, such as the three devastating hurricanes (Katrina, Rita and Wilma) which hit the US during August-October 2005 with total insured losses in excess of $US60 billion," KPMG said yesterday."Three quarters of respondents cited this as the single most important factor in effectively managing their risk."Many were considering allocating capital to the risks run by an individual business unit, the survey found. This would make it easier to match risk and reward, and make the business units themselves more accountable.Risk and globalisation were forcing insurers to reconsider their business models, Mr Greig said.
© 2006 The Age