Re/insurers face structural issues and need to tackle high expense ratios to remain competitive, Everest Re's CEO of reinsurance Jon
Despite fears about the impact of convergence capital on traditional reinsurance,
“The insurers have a structural problem to figure out because of things that have built up over decades: people, IT and distribution systems that they have integrated into the new world order that shackle the reinsurance and insurance value chain,” said
“Insurance companies’…infrastructure was built to have offices everywhere and underwriters everywhere to capture a lot of businesses. But with that comes a lot of expense.
“Where they will struggle is some of their ability and opportunity does not reflect the expense ratio that they have today,” he added.
High expense ratios can be seen as an opportunity rather than a threat for re/insurers, as cutting fat can give them a competitive edge,
Everyone in the industry should be focused on answering how to reduce expense ratios to improve the industry’s overall performance,
“We run at a 2.9% ratio,” said
“It is the lowest ratio in the industry, our average competitor is about five points higher than us and the average is a lot higher than that,” he added.