There could be more political surprises coming after the U.S. election of Donald Trump and Britain’s vote to exit from the European Union but one leading insurance executive isn’t too worried.
“I don’t think Brexit is going to have nearly the impact people are talking about. For the most part, London will remain the hub of financial services,” said William R. Berkley, founder and executive chairman of Greenwich, Conn.-based insurer W.R. Berkley Corp., who was the keynote at the annual meeting of the American Institute of Marine Underwriters in New York.
With regard to the U.S. election, Berkley said he is confident the country will be fine. “I am an optimist,” he said. “We’ve had two world wars, we’ve had recessions, some almost depressions, we’ve had a great depression. We’re all still here and we are doing okay.”
He is also optimistic about the insurance business. He said it’s an exciting time to be in the insurance business, even though returns have declined.
“This business will come back to disciplined pricing and underwriting skill; you need them both,” said Berkley. “The people who are successful have access to capital and expertise,” he said. “All of us have to figure out how we operate in a world that’s so fast but our results don’t happen that quickly.”
He said that the most exciting parts of the industry are ones that offer unusual opportunities such as artificial intelligence and big data. “New and updated information continually come into play and let you make better and better judgements,” he said.
According to Berkley, the business is better than is talked about.
“If you were to ask those embedded in the business a long time, they would tell you that we don’t know our results for a long time, so we don’t know how to price the business as well as we could, but technology will improve that,” he said. “I’m optimistic that pricing will get better. We can complain appropriately because our results are not as good and certainly investment income is disappointing.”
He said he had expected the business to become more competitive when interest rates moved up. “It did a little, but not a lot,” he said. “But I don’t think people are going to leave the marketplace. They are going to find some losses. There will be the new asbestos, and those people will get scared by it. Maybe you’ll have three unforeseen hurricanes and some will find out they didn’t buy enough protection or the one in 100-year storm was one in 20 years. Those who don’t have a long enough point of view will be driven out.”
Berkley told the marine underwriters that new technology is going to impact how cargo is measured and the speeds of boats.
“We will be better able to assess the risks as the data accumulates. It’s really going to require a more data-driven approach to the business. It’s exciting and like everything else, we’ll all have to change,” he said.
Sources: American Institute of Marine Underwriters and Insurance Information Institute
*This story appeared previously in our sister publication Insurance Journal.