Shashi GOKARN, President, INTERLINK Insurance & Reinsurance Brokers
The recession created negative impact on international financial market. However, the effect on each country was different depending on its internal and external trade. Some countries managed to handle the situation efficiently, whereas a country like Dubai (an independent Emirate in UAE) had to slow down its activities especially in Real Estate/ construction areas.
XPRIMM: Last year, at FIAR, we talked about the impact that the global
crisis has over the insurance and reinsurance markets and about what
the insurers, reinsurers and brokers could do in order to limit its negative
effects. How do you appreciate the companies' activity over the
past year? Were they efficient in their attempt to fight against the
crisis?
Shashi GOKARN: The recession created negative impact on international
financial market. However, the effect on each country was different depending
on its internal and external trade. Some countries managed to handle
the situation efficiently, whereas a country like Dubai (an independent
Emirate in UAE) had to slow down its activities especially in Real Estate/
construction areas. Those countries who were dependant on foreign markets
for their products, foreign investors or on Holiday makers, faced great
challenges, whereas countries who utilised their own market for their
products absorbed the shock very well. Such countries provided moral
supports to other countries to come out from the recession tangle and
therefore the international market is now better placed to overcome the
negative effect.
As it is known, the insurance and reinsurance companies experienced difficulties
in business growth. Still, the market could hold on well, except some
hick-ups here and there, to survive and continue. Added advantage in
this recession period was not experiencing any major cat losses. This
is nothing but blessing in disguise.
Insurers and reinsurers co-operated well with their respective clients
and supported them wherever possible. Reinsurance market worked as usual,
competing for the business, but accommodating their clients whenever
required. Insurers faced hilarious task to maintain their books, but
could do so with great difficulties. Many of the insurance companies
have not shown any growth in premiums, but they could survive to see
better tomorrow.
Brokers on their own tried to balance both sides taking care of the clients
as well as insurers/reinsurers. The brokers community is at receiving
end from both sides; still, improving situation has brought back the
ray of hope.
Over all recession seems to be the past and future is picking-up.
XPRIMM: In which ways has the crisis changed the public perception
towards the insurance broker? Is his role more important than it was
before the crisis?
S. G.: According to us, the public perception in our part of the
world has not changed much. However, brokers are the connecting link
between
insured & insurers and also between reinsured & reinsurers.
During recession, when original insured gets depressed because of the
market conditions, it becomes duty of broker to keep insured's spirit
flying high to continue the existing protection. Similarly, the reinsurance
broker has to play a positive role to convince reinsurers to offer
better rates to the client without adding any burden to them unless
it is absolutely necessary. When any such crisis like recession occurs
the spirit of the market already being affected, brokers have to hold
on their nerves to advice all concerned from insured to insurer & insurer
to reinsurer.
XPRIMM: What are the next steps that the companies should take in
order to escape the present pressure generated by the crisis?
S. G.: Companies, both direct as well as reinsurance, should co-operate
with the client to continue existing good relations. Everyone knows
that during this crisis period insured is the most affected party who
needs support from everyone. Insurance company as well as reinsurance
company could survive only if insured's health is in good order. To
overcome the situation preserve companies energy by controlling not
so important expenditures. If necessary, companies should spend their
resources only when it is absolutely necessary. It doesn't mean
retrenchment of existing employees has to be considered unless the
company is in dire situation. This thumb rule applies to insured, brokers,
insurers and reinsurers.
XPRIMM: Which are the main arguments that the insurers should use
in trying to convince the public that the insurance products are necessary,
especially in time of crisis?
S. G.: Insurers should point out that during crisis such as Recession,
terrorist attack the mood of the public turns towards depression. Market
gets disturbed which in turn affects individuals. When individuals
are affected, a small incident may give rise to a huge loss. Under
such situation it is insurance protection which takes care of them.
Because of crisis, the company may loose its market giving rise to
accumulation of finished goods or raw materials in their godown. If
any untoward incident happens, the company will loose its capital unless
covered by insurance.
XPRIMM: Thank you!
Editor: Oana RADU
| Published on 01.07.2010 |
