The insurance industry has fared better than the financial services sector during the economic crisis and should not be saddled with the same regulatory burden as its counterpart.

That was the message from Mike McGavick, CEO of XL Capital, who was speaking on 'The Next Crisis: learning from the past, preparing for the future' at the first day of the Insurance Day Summit held at the Fairmont Hamilton Princess Hotel yesterday.

Mr. McGavick said that trial and error were key to progress and it was his hope that over time the lessons learnt outweighed the mistakes made, but he warned that this generation ran the risk of being one of the few in history not to give its children a better opportunity in life. Setting out the lessons that could be learnt from the recession within the context of the world, Bermuda and the insurance sector, he said you only needed to look back as far as the Great Depression of the 1930s to see that a big increase in regulation had led to the next economic downturn.

American International Group, Goldman Sachs and most recently BP were examples of companies that had been hauled over the coals for their actions and political leaders were merely adding fuel to the fire with their rhetoric – a dangerous situation – according to Mr. McGavick.

He said it was important for insurers to make the point that they were not the cause of the credit crisis but rather had remained active investors and helped to mitigate risk in the face of regulators and politicians seeking to rope them into the whole mess.

"This misunderstanding will literally lead to us not being able to fulfil our mission," he said.

Mr. McGavick said there were a number of threats facing Bermuda's insurance market, including hidden risks within Solvency II, the proposed Neal Bill and the possible prohibition of the free flow of intellectual capital on the Island.

Premier Ewart Brown had kicked off proceedings with an address focused on the role the Island's insurance industry plays in the US market, followed by the opening keynote address by David Sampson, president and CEO of PCI, on 'Seizing the opportunities from the financial downturn'.

Mr. Sampson gave an overview of the current state of the American economy and its impact the property and casualty segment with centuries old bankruptcy laws being overturned, the political allocation of capital and US government taking on a new role in health care all changing the financial landscape.

Allied to this, he had foreseen a continued economic fragility, a high degree of economic political volatility and growing economic populism and told attendees they needed to be aware that every decision they made as a business executive would have political implications further down the line.

But he said the insurance sector had weathered the economic storm better than most, including financial services, and needed an environment which was conducive for it to thrive.

"The property/casualty industry has a great story to tell," he said. "We have been consistent since the beginning of this financial crisis as we didn't create it and we have performed well during the crisis.

"Underwriting risk was the core part of our business and we never got away from it although others did and we also retained the risk we had taken on. Also, we were not highly leveraged and pursued a very conservative investment strategy."