This RIMS 2015 panel gathered senior executives from insurance carriers to discuss what they believe are the emerging issues in the insurance marketplace.
- Daniel Riordan, Chief Executive Officer, Zurich Global Corporate, North America
- John Doyle, Chief Executive Officer, Commercial Insurance, AIG
- John Lupica, Chairman – Insurance, North America, ACE Group
- Thomas Lawson, President, FM Global
- Roger Andrews, Director, Risk Management, E.D. Bullard Company
Do you agree with the opinion of the broker executive panel that the cyclical nature of the market might be a thing of the past?
- I don’t view the P&C market as just one market – I view it as a collection of markets. I see micro cycles, but I agree with the brokerage firms that it is not shifting as dramatically.
- There is so much capital, it is hard to think there is a catastrophic event that could cause a huge shift, but there might be another unknown like a 9/11.
- Our industry is getting better at pricing risks, which is helping diminish the large market swings that we had in the past.
The cyber take-up rate has been slow from buyers. Why?
- The take-up rate is accelerating. It is not as hard of a sell as it used to be since the exposure and claim activity has picked up. We don’t have to prove the need as much anymore.
- Cyber is about a $2 billion market at this point, so it is growing, and the demand is increasing significantly – especially in certain segments like retail and financial services.
- We’ve been working on this since the late 1990’s and it has been far slower to grow than we expected. Like most early generation of products, the product probably missed the mark initially and we have made adjustments to broaden the coverage provided under it.
- The unfortunate reality is that it takes some major disruptive events to create a need for this product. Now that these events have occurred, people are paying much more attention to this exposure and are looking for solutions.
What do you think the implications of the talent gap are for the industry?
- I think we have great opportunities for the next generation starting out in this industry. The Baby Boomers are retiring and that creates a lot of new jobs. Each generation looks for something different and we have to keep our fingers on the pulse of that and provide what they are looking for.
- We have been investing in a professional development program since 2005 and have hired hundreds of college graduates. The employees that we are getting are phenomenal. They are better educated, prepared and work diligently. I think they will be more thoughtful than we ever were on things like cyber, drones and other emerging risks.
- When I visit with students, they are so much more prepared than we were to enter our industry. We hire around 1,000 trainees and interns each year and we are getting tens of thousands of applications for these positions.
- There is a talent gap. This generation wants more than just an underwriting position. They want things like growth opportunities and ways to give back to the community. We have to do more to attract this generation, create these opportunities and also show them the exciting side of our industry.
Many risk managers report to the finance department. What progress are the carriers making to streamline claims payment of valid claims?
- We pay $135 million in claims per business day. To do that, we have developed technology and techniques that enables us to pay claims quickly.
- There is new technology, like the use of drones, which can help accelerate claims turnaround.
- We made our reservation rights letter three pages maximum because, when it was longer, it was getting passed to our customers’ legal department, which slowed things down.
- It’s about providing certainty in claims. We have data that we make available to our clients to track the entire claims process.
- It’s important to set the expectation with your clients so that, when they do have a large loss, they understand the process.
What other emerging issues should risk managers be thinking about?
- The subject of regulation. It does have the opportunity to prevent the growth of our business, especially if you move out of the country.
- The challenge for risk managers is to get access to their C Suite so that they can be part of solutions. What keeps them up at night is a great opportunity to connect with them on risk management issues like cyber.
- The old risks don’t ever really go away, they just get pushed to the background, so risk managers have a lot on their plate.