We need to practise sustainable underwriting, says ACE's Kendrick

Underwriters need to usher in an age of “sustainable underwriting” to deal with changes in the market that have created a “new normal” said ACE European Group chairman Andrew Kendrick.

Talking to an audience of industry members at an Insurance Industry of London market issues lecture at Lloyd’s today, Kendrick laid out his vision of what needs to be done to sustain profits in a “permafrost” economy.

Kendrick set down “five do’s and don’ts of sustainable underwriting” that he said must be adhered to:

·         “Smarter capital allocation,

·         Protecting the asset side of the balance sheet,

·         Taking control of our pricing strategies,

·         Better portfolio management and

·         Making more of the age of big data.”

These steps were highlighted in a response to a market that he said now found it difficult to achieve underwriting profit and where new business was hard to come by.

He said that the changes to the economy meant that combined operating ratios of 100% could no longer be relied on to achieve profit, and that “the industry now needs to target a combined ratio in the low to mid 90s to have a chance of generating adequate returns.”

Closing his lecture Kendrick said: “Sustainable underwriting is not rocket science. Fundamentally what it comes down to is having a long-term vision and a greater sense of determination and purpose.”