View Full Version : CNNMoney: Challenging markets will lead to better risk-management practices

11-14-2008, 05:32 PM

Lessons the insurance industry is learning in these challenging markets will lead to better risk-management practices, said Christopher "Kip" Condron, president and chief executive of Axa Financial Inc.

"Winners in the industry will be the best risk managers, not the best marketers," Condron said Thursday at the 19th Annual Executive Conference for the Life Insurance Industry at the New York Palace Hotel.
Investors are currently more focused on the safety of the guarantor than the guarantees they provide, and those insurers with the biggest appetite for growth are most likely to fail, he said. "We are already seeing signs of some willing to take on more risks than we think are prudent."

The financial turmoil has also ushered in an era of great opportunity for insurers to help Americans who have suffered drastic reductions in their 401(k) plans and plunging home values and for it to influence how the industry is regulated, Condron said.
In this new era, it will be the insurers perhaps more than the money managers" who direct how much risk will be taken, he said.

As a result of the downturn, many investors will need to continue to accumulate wealth even as they begin drawing down their retirement savings, he said. "Interest in guarantees is rising."

Reform of the insurance industry regulatory system is likely to come quickly, Condron said. The current state-by-state regulatory regime is the product of an era when inter-state commerce was the exception, not the rule, he said, whereas today globally generated capital is deployed globally.

A national insurance regulator "will be top in the mind of Congress" in coming months, and reform could come as soon as within the next year, Condron said. "We may not have a national insurance regulator yet, but with the takeover of AIG," he said, "we have our first nationally regulated insurer."

Condron said he doesn't think the industry will ever have a global regulatory system, but there could be some global agreement on some issues facing the industry.

12-01-2008, 03:40 PM
Did anyone learn anything from 2000 crash?

We'll see if this sticks more then 24 months after we get out of the hole.

12-01-2008, 04:28 PM
I predict that executives will not learn as much as you might think from this. The returns of the past year will likely be seen as something that can never happen again - a blip - a one time deal, and will likely ignore the experience in their future pricing.

12-02-2008, 04:30 AM
I agree with the above. It's not like this was the first time anything like this has occurred.

"Why were we so crazed about tulip bulbs again?"

"Hell if I know."

"We'll never do =that= again!"

It's bad enough that people don't learn from other people's experiences (i.e. history), it seems people don't learn from their own. Clearly, the penalties for repeated stupidity is not high enough.