Willis boss predicts benefits from economic downturn

Joe Plumeri, chief executive of Willis, has predicted that the economic downturn will cause a gradual increase in premium rates.

Plumeri said the lack of money in the credit and stock markets would be a big factor in underpinning a rate rise as firms look to increase revenues.

Speaking at the annual dinner of Airmic last Wednesday in London, he said: “In a recession, there is a gradual upswing of rates instead of a sharp increase like that which occurred in 2002 after the World Trade Centre attacks.

“If the market is hardening, it should be on a slow basis to give people a chance to afford it.”

Two positives to come out of the financial crisis would be increased regulation and transparency, he added.

“If everyone was transparent, off balance sheet issues, structured investment vehicles and credit default swaps would have been found.

“Financial institutions and insurance companies will now have to be transparent. That’s a good thing because you can feel secure about where you put your risk,” he said.

Plumeri said the industry would have to battle on before the stock market picked up about five months before the end of the recession.

“I’ve always admired the resiliency and the courage of the British people and have no doubt that we will all get through this crisis.

“As an industry, we need to see the opportunities in the adversity and make a parade out of a financial riot by getting ahead of the game and capitalising on these opportunities,” he said.