Cut expense ratios to compete: Everest Re - FREE

Cut expense ratios to compete: Everest Re - FREE

Re/insurers face structural issues and need to tackle high expense ratios to remain competitive, Everest Re's CEO of reinsurance Jon Doucette told an event held in London today.

Despite fears about the impact of convergence capital on traditional reinsurance, Doucette argued that structural problems behind the “phenomenon” were being overlooked.

Doucette gave a reinsurer's perspective at the Convergence London 2016 event hosted today by Reactions’ sister publication The Insurance Insider.

“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 Doucette.

“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, Doucette argued.

Everyone in the industry should be focused on answering how to reduce expense ratios to improve the industry’s overall performance, Doucette said.

“We run at a 2.9% ratio,” said Doucette, speaking on behalf of reinsurer Everest Re.

“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.

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