Tough times call for a new approach from insurers

The biggest challenge facing insurers in the non-life and general insurance market today is how to deliver the right product mix and corresponding price to satisfy the customer while ensuring that risk management criteria are not compromised, says Richard Collard, Director, Market Development, at enterprise solutions software provider, ILOG, a subsidiary of IBM. Current economic conditions have created this two-pronged challenge of stronger pricing sensitivity, while requiring tighter underwriting criteria to protect capital. At the same time, insurers are struggling with lower demand and weak investment income. Indeed, all investment vehicles have lost value since last year, while those insurers with large positions in battered institutions or who relied on mortgage-backed securities have had to largely write off these investments entirely. With capital levels are under pressure insurers need to focus on risk and the ability to correctly identify and process desirable business. Mr Collard describes this as a ‘flight to quality’ – in reverse!