One of the main events for insurance and reinsurance executives last quarter was the International Insurance Society’s Global Insurance Forum, which took place in New York City in June. More than 500 executives from around the globe attended the conference—two days at the Waldorf Astoria Hotel and one day on site at the United Nations—joined by representatives from the United Nations, the World Bank and the World Economic Forum.

Here’s what some of them had to say.

On Regulation

“Globalization of our industry is happening, but it’s happening with a major impediment. We have an entirely balkanized regulatory system. So the ability to create globally compliant solutions is incredibly difficult, incredibly costly, and yet for our clients, it’s as easy as getting a website to be a global business.”

Michael McGavick, CEO, XL Catlin

“Capital constraints have created an environment where we would make an argument that London is less competitive today than it ever has been and it has less of an entrepreneurial flair. That’s frustrating for us…If Betty Grable had gone into the London market today, she would be unable to have her legs insured because the capital charges would be too extreme.

We worry about the relative capital standards being applied to an industry that has not demonstrated an inability (double-negative intended) to manage the volatility in the sector on the liability and the asset side.”

Kean Driscoll, CEO, Validus Re

“We actually sell a promissory note. As insurers and reinsurers, we have a duty of care to make certain that what we sell—that promise to pay—we can deliver. Otherwise, we’re living a lie. I think the only real purpose of regulation is to make certain that we as insurers and reinsurers can honor that promise to pay.”

Stephen Catlin, Executive Deputy Chair, XL Catlin

On Government Insurance Programs and Backstops

“The argument for government involvement in any market is a market failure…In the U.S., probably the most notable example is the federal flood program…where greater private sector involvement would provide a feedback loop of better construction standards and better locations.

The flip side is the terrorism reinsurance program—which very nearly didn’t get renewed—[where there is] an obvious role for government to play as a complement to the capacity that the private sector can provide.

As I see it, for the tail risks that are linked to macro factors where the government has the greatest control, that’s where I see the government should be providing backstop capacity…”

Peter Hancock, CEO, AIG

“Cyber actually should be part of TRIA because if we have that kind of backstop from government, then we can proactively look to service the needs of our clients within our ability to pay. The problem at the moment is none of us can work out how to work out that downside risk to capital…

The CEO of a large company yesterday said something I don’t agree with: ‘If we’re involving government, we’re failing.’ I don’t get that actually because we fail if we take on exposure beyond our capital. And our capital in this industry is not big enough for some of these extreme events. And the sooner we put our hands up and say so, the better in my view.”

Stephen Catlin, Executive Deputy Chair, XL Catlin

“There is a movement now that taxpayers should be in our business…Bigger and bigger pieces of what we do [are] ending up in the public sector. In the U.S., flood insurance is purely federalized; crop insurance to a large extent is federalized…One challenge is for us to innovate on product. But the other challenge is how do we get the taxpayer—and, in essence, the government—out of our business and leave it to the private sector…

When we try to compete with taxpayers—the federal government in the U.S. and other governments around the world—that’s where I think things break for society because the true cost of the product gets hidden…And once you get a population accustomed to a subsidy, it’s very hard to bring it back.”

Dinos Iordanou, CEO, Arch Capital

On Emerging Risks

“Food safety in China is a huge issue…It’s something where the insights [from what] the insurance industry has faced all around the world in terms of insuring food supply chain could actually help a lot of people.

I mention [this] partly to be provocative—because I don’t think if you were to collect all the insurers in this room and say how much capacity would you put up for product liability that it would be enough to address the issue…Long before the capacity is there for that issue, an investment in advice, consulting and loss prevention is needed.

The nature of advice that comes from insurance companies is very different than from independent consultants. We have skin in the game; we lose when our advice turns out to be irrelevant. It’s not just PowerPoint.”

Peter Hancock, CEO, AIG

“Our greatest concern and the greatest concern of our customers is cyber liability…No one really knows what’s out there, and fear is what gives us the reason for being…We need to spend money and time in understanding cyber risk and helping design products that meet our customers’ fears as well as their realities.”

William R. Berkley, CEO, W.R. Berkley Corp.

“Cyber is a lot like pollution was when pollution first became a concern for industry and the insurance industry. The coverage isn’t specifically there, and it’s not specifically excluded, whether it’s a property policy or a liability policy…

The policies that are there right now for cyber are not what insureds want to buy. And the reinsurance that’s there is not what reinsurers want to buy. But likely, as events unfold and there are more and more losses, it has the potential to be a $50 billion insurance market not just for specific cyber but for the terrorist-type exposures.”

Britt Newhouse, Chair, Guy Carpenter

“The need is enormous, but at the same time it runs contradictory to a lot of beliefs that we might have to break from. Traditionally, insurance has been a mechanism to protect people from fortuitous events. Cyber bridges across to intentional events. It is the equivalent of trying to insure the arsonist.”

Dinos Iordanou, CEO, Arch Capital Group

On the Value of Insurance

“One of the problems we have is we sell a product where there’s no user enjoyment.”

Stephen Catlin, Executive Deputy Chair, XL Catlin

“When a disaster happens, our ability to persuade people is at its worst. When people are suffering, no one wants to hear that crummy, rotten insurance industry complaining…The time they want to hear from us is now, when there is not a catastrophe—with logic and understanding.

William R. Berkley, CEO, W.R. Berkley Corp.

“One of the many, many benefits of the concentration of knowledge in the intermediary sector is that we’re actively—reinsurance brokers or reinsurers—thinking about how can I create more demand for my product. How can I get more people…that are not insured [to come] into the insurance sector. It wouldn’t have happened but for technology and the ability to analyze it.

You have more people thinking about how to persuade XYZ country that the last flood that happened to their neighbor was dealt with quickly, efficiently, the economy got back online quickly.”

Britt Newhouse, Chair, Guy Carpenter

“The challenge we’ve got right now is the lack of increased demand. Clearly, it’s not a dearth of capital. The intersection of public and private markets is a natural area where we can take the existing product suite and expand the size of our pie…

Flood is ripe for…an expansion of the private market role. [Insurers have an] ability to leverage analytics to out-select these markets of last resort. We’ve made great progress in Florida specifically…I’m very bullish long-term about the prospects of increasing the private market penetration in earthquake areas…”

Kean Driscoll, CEO, Validus Re

“We do the best as an industry when we deal with the small business owner because small business owners have no other avenue to de-risk their business activities…Most have their entire net worth tied into that business, so they need the security that our products bring to them…It’s [more of] a question when it comes to humungous corporations. Some of them have as big a balance sheet as we do…”

Dinos Iordanou, CEO, Arch Capital Group

“This is the industry that practices the science of risk identification. You model risk. You’ve been there for hundreds of years creating much of the science of probability itself in service of insurance.

We have growing risks and shifting probability distributions of extreme events on the planet. We have an interaction of technological and climatological risks. We need the knowledge of this industry to help map these risks, to help them be better known [and] for the industry to speak out, which I haven’t heard very much or certainly not sufficiently on the changing risk patterns coming from anthropogenic change—that is, human-induced change.

Explain to the legislature of North Carolina that indeed their sea level is going to rise. That’s going to mean more floods, more storm surges and loss of property values. Explain to the people of the Southwest and the Midwest that indeed mega droughts are on the horizon [that will produce] calamitous losses in agriculture…

A core function of insurance is to press for good behavior of those who appeal for financial assistance. We don’t have that now. When Nepal’s earthquake hit, you found again and again and again that building codes were never developed or never enforced. And, of course, there was no financial insurance…

Governments cannot do this on their own. They can’t even largely do it [at all]. This agenda is too complex. Governments are not good insurers. They are not good risk managers. Governments are led by politicians whose job is taking power.

Your industry is led on principles of risk diversification and mitigation. It’s led fundamentally on principles of sustainability. The world needs you.”

Jeffrey Sachs, Director of the Earth Institute at Columbia University

“As an industry we’re rich in data, and that’s where we have unique comparative advantage [to pure capital providers].

What can we as an industry tell governments about the most efficient way to build resiliency? Is it to builds dykes at huge expense, or Thames barriers? Or is it to put the mechanicals on the roof rather than in the basement? [As] an industry we have learned much from our mistakes. We can share that, and that’s more valuable than putting capital to work, especially in countries where cities are still being built. [For example], 300 million people will be moving to new cities in China in the next 30 years. There’s a lot we can do to make those cities more resilient, less vulnerable than this city was to Sandy.”

Peter Hancock, CEO, AIG

On Alternative Capital

“In Sandy, [which] came ashore on probably the most insured square mile imaginable on the planet, 50 percent of the risk was insured. We have so much more to do. And the fact that the capital [markets] guys want to come to the safe places, that’s not a problem because it expands the total capital base of the industry If we use our skills to build the pilot lights for where to next. That’s our job, not theirs.”

Michael McGavick, CEO, XL Catlin

“You have to be both a risk taker and a manager [of third-party capital]. That creates the right alignment with investors…I see the model primarily as an add-on—a very accretive add-on in terms of fee income. But I can’t imagine that the industry will move away from being primarily a risk taker. It’s first and foremost in our DNA. Second, what our partners want from us…is quality underwriting.”

Kean Driscoll, CEO, Validus Re