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Insurance renaissance How globalisation, analytics, alternative capital and innovation will give the industry back its lost relevance By Terry McMullan

MIKE MCGAVICK IS INSIGHTFUL, candid and unafraid to speak out on what he sees as the global insurance industry’s declining relevance to business – and the factors that can turn the situation around. The Chief Executive of the XL Catlin Group – he masterminded the merger of his XL Group with Catlin in January – can see the mess the global industry is in at the moment, but also sees the possibility of a renaissance in the industry’s fortunes. Speaking at the International Insurance Society’s (IIS) Global Insurance Forum in Rio de Janeiro in 2012, Mr McGavick upset many of his counterparts when he accused the industry of failing to keep up with the rapid pace of change in global society. “Our participation in the economy is in decline and we are doing very little about 26

it,” he told industry leaders in a stirring speech calling for “growth through insight and innovation”. He said the global insurance industry is “afraid” of the rapid growth of new markets and accused insurers of only coming to grips with new market opportunities once they have accumulated “very large datasets” to measure risks. “Rapid change is the enemy of the way we have always practised insurance,” he told the Rio audience. In June Mr McGavick was back on the IIS stage, this time in New York, which Insurance News attended as the event’s gold media sponsor. His critical stance hasn’t changed that much, with one subtle difference: now he sees insurance heading towards a new age insuranceNEWS

August/September 2015

in which old skills and new opportunities combine to win back the industry’s relevance to customers. And he shrugs off comments by “a few of my peers that what I had to say [in Rio] was very bad for the industry, I should stop saying it, it was unhelpful and that I was depressing the [industry’s] share prices – which I do not have the power to do”. Now, he says, his belief that the industry has lost relevance is more widely accepted. Mr McGavick bases his argument on the global property and casualty sector contributing about 3.4% of total economic activity in 2002. By 2011 it had shrunk to about 2.8%, “and that is, by any definition, a decline in relevance”. “While the global economic pie was

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