Peter Zaffino, chairman and CEO of Marsh, provided insight into managing change in the global marketplace at the 2013 Bermuda Captive Conference.
Zaffino explained that “today’s emerging trends can compound existing risk in this industry … and the market is picking up a lot more risk, and much more diverse risk, over time.”
He went on to cite several key trends that are affecting the market, including: population densities continuing to drive insured values along coastal regions worldwide; increasing economic risk and volatility, particularly in mature economies; and even greater convergence between capital adequacy and risk management.
“Asset classes are showing more convergence, and the market is experiencing large losses on depressed portfolio valuations, while also seeing downward pressure from low interest rates on return on equity.”
“There’s also what can be seen as a corresponding increasing use of alternative capital to drive business as investors hunt for yield in an otherwise low return environment.”
Zaffino also stressed the importance of effective data and analytics to further enhance relationships between a business and its partners.
“Companies must invest in data effectively and use it to help make insightful business decisions that go beyond quantification of retained risk.”
“The emphasis should be on proactive objective setting from effective interpretation of the data, using it for both tactical and strategic business actions, to drive resource allocation and leverage competitive advantage.”
