The worldwide credit crisis and financial market meltdown highlight the respect for risk that all financial firms must adopt, says a leading US insurance executive.

Gen Re Chairman and CEO Tad Montross has published a report – Lessons From the Global Credit Crisis – in which he argues the seeds of the crisis were similar to factors that have caused past problems for the insurance industry.

These include naïve capacity, complex structured products, misapplied diversification theory and the naked pursuit of growth.

“Although the insurance industry has weathered the storm in relatively good shape, the similarities of the crisis to past insurance crises invite a reassessment of how we think about the philosophy of assuming, managing and transferring risk,” Mr Montrose said.

He called on buyers of insurance and reinsurance to consider risk transfer as buying an asset rather than a liability and warned insurers to be vigilant about underwriting “tail risks” or extreme events.

“High-severity events can ruin companies, but since they happen so infrequently they are tempting to ignore,” he said.