Summit Report - Thinking ahead.

(From Reinsurance)

Byline: Isobel McCalman.

The first of five summits sponsored by Guy Carpenter and Lloyd's was held at the Monte Carlo Rendez-Vous. The event gathers a sector-leading range of chief executives to debate the foremost issues in reinsurance.

The first debate of the session concerned the question of whether the traditional rationale for reinsurance was still meaningful. Introductory remarks highlighted the changing environment for the market, including more sophisticated products, the challenge of managing capital in a volatile stock market and the additions of risks such as man-made catastrophes.

The question for the panel was whether reinsurance was moving forward in the right way, in the face of these changes.

The panel felt that there was a misunderstanding between the reinsurance and banking sectors on how risk is assessed and managed which in turn leads to a fundamental lack of appreciation of the reinsurance business.

The point of view from the banking sector representative on the panel was that the reinsurance sector is opaque and this causes problems, not least because of the lack of profits. There was also a warning that the sector must not repeat the mistakes of the past.