The insurance industry must modernise and adapt to the needs of customers in the digital world in order to survive, according to the head of a Bermudian insurer and reinsurer.

Mark Watson, of Argo Group International Holdings, said in a midyear letter to shareholders that improved efficiency would be the result of a commitment to focus on customers.

“As with all our competitors who operate internationally, we know that the situation in the London market and others like it is unsustainable,” Mr Watson said.

“The pressure on pricing in those geographies will ease only when our industry as a whole takes responsibility and makes some deliberate changes.

“We must no longer refuse to adopt processes and protocols that make us more efficient. We all must commit to addressing the real, evolving needs of customers rather than dusting off well-worn products for their consumption.

“Brokers, sitting close to their customers, must acknowledge a duty to ask about changing needs, consider them and help us all respond.”

Speaking in the midst of a soft market cycle, Mr Watson added that clients too had to be realistic about the price they were paying for coverage and what services they would get in exchange.

“We also must resist the temptation to sell short-term solutions for the long-term needs of policyholders,” Mr Watson said.

“Those policyholders too must admit that as long as they insist on paying bottom dollar, they will have neither the coverage nor the service they will surely need when a catastrophe hits.

“Lastly, investors in our industry must be rational in their expectations for returns given the environment in which we do business.”