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A leading reinsurance consultant has warned the reinsurance industry that it needs to get “back to basics”. Harvard J Thwakkenbakker IV, senior vice at management consultants VãcUöusity, has warned that the reinsurance industry is forgetting its core values and is underwriting risk on its own merit, rather than the tried and tested principle of writing for market share.
“I know investment returns are poor at the moment, but surely that’s all the more reason to write for market share. Get in as much premium as possible, that was the mantra in my day – and it applies today,” said Thwakkenbakker. “Yes, interest rates are low. Yes, investment income is negligible. And yes, supervisors are focussed on risk-based capital and sound underwriting practices, not least from a governance point of view,” he added.
“But dammit all, these young underwriters need to have a proper sense of history and tradition. Underwriting profits are a myth, a legend, an El Dorado. The reinsurance industry should be striving for cash in hand, not ‘understanding’ the risk. It’s simply too radical, too much of revolution for such a traditional industry,” said the consultant. “Underwriters need to remember the old adage: ‘Everything has a price, usually about 2% cheaper than the next underwriter.’”