A new “golden age” for insurance beckons as growing middle classes in developing nations seek to protect their wealth, according to Willis Group Chairman and CEO Joe Plumeri.

He says public insurance is “in retreat” in the industrialised nations, and this will provide an opening for private insurers. There will also be greater opportunities for insurers in countries such as China, India and Brazil, which have growing middle classes.

“In the second half of the 20th century, hundreds of millions of people moved out of abject poverty and into the middle class,” Mr Plumeri told a conference in Bermuda last week.

He says the bigger story of the 21st century will be how these people transform the world. “And how will they protect their gains – their foothold in the middle class?”

He says there will be increased demand for all types of insurance, from life and health to marine, aviation and professional liability as well as property and casualty.

“The new middle class will need brokers that understand them and their industries. They’ll need carriers who are innovative, financially secure and who are there when they need them – carriers with a reputation for paying legitimate claims quickly.”

Mr Plumeri says China and India will account for two-fifths of the world’s urban growth, and insurers will be needed to protect the housing and infrastructure that is built.

“For insurance, it will truly be a golden age.”

He also says government spending in the US cannot continue at the current rate, and public insurance “may no longer be an uncontrolled growth industry” there.

“As the public sector inevitably retreats, this will create opportunities for the insurance industry in many sectors,” he said.

He says the US Government seems to be realising that the National Flood Insurance Program is unsustainable and has consulted insurance and reinsurance executives on the possibility of privatising it.

There is also public talk about scaling back the Terrorism Risk Insurance Act of 2002, set up following the September 11, 2001 terrorist attacks when reinsurers withdrew from the market.

Mr Plumeri says Willis has adopted a “commercial sustainability” approach to insurance, based on two core ideas. These are that insurance sits at the centre of a company’s security, “it’s not just about coverage and claims”, and the way to look at a company is holistically, with stakeholders of every kind.

“It’s an envelope within which the safety of the company is secured,” he said. “It’s achieved by anticipating and managing risks to which it’s exposed – legal risk, reputational risk, operational risk, terrorism risk, environmental risk, legislative risk, political risk and so on.”

He says this is a more useful approach to insurance because it encompasses all the issues that businesses have to get right to survive.