Q: How would you describe the insurance market today?
Chris Sparro: The insurance market, as many people will tell you, certainly hasn't changed in the view that it's constantly changing. Change is constant. And certainly, with what's going on in the world today the insurance market continues to develop with a number of central themes that most carriers and brokers are concerned with currently. And a lot of the concerns are related to the economy, as you highlighted, with geopolitical risk being another one — particularly with the unfortunate circumstances in Russia and the Ukraine. The impact of both, that what's moving in the economy and the geopolitical risk around its impact on inflation, whether you want to look at it from a wage inflation, medical inflation, just plain social inflation, or even what has become a catalyst from third party litigation funding mechanisms that are out there. But clearly, inflation is a concern for everyone within the industry. Climate change will always have an impact, and certainly with a level of importance. And you've seen that just from a variety of different avenues. One being the continued CAT frequency, and the severity associated with that. It's really caused the industry to look at its models and make sure that we have the right data embedded in those models because we’re all hearing the term, “it's the new norm.” So how do we want to look at that “new norm”? How is it being accepted from an insurance perspective and a reinsurance perspective, when carriers and clients are thinking about limits to buy in the amount of risk they want to assume within the program structures? Obviously, there's a lot that's going on in climate change that's impacting property portfolios, but not just in property portfolios, you also see a much more broader view around ESG initiatives right now -- some clearly tied to the environment, some tied to social and governance -- and yet it's particularly exciting for us on the insurance side to be able to help with that transition as customers, clients and brokers are thinking about how we move towards a greener environment or more inclusive environment. What are the things that we can do from a risk management perspective, the tools that we can provide the leadership so that companies feel comfortable that they have partners — working with them and supplying them with information — to help them continue to manage their operating governance around their company for the generation of revenue and profit, that is a benefit to their shareholders and to their employees. And then finally, the one that we continue to talk about — which also goes in that “new norm” category but continues to emerge based on the breadth of it — is cyber, and the risk associated with cyber, particularly given some of the other issues I've alluded to earlier.
Q: What do you see is the biggest challenge facing the industry today?
The role of leadership, quite frankly. There are a lot of products, a lot of services, a lot of capability, but in all my time in insurance, which is roughly 30 years, the role of insurance is to be able to take a lead, when issues are emerging. People are looking for solutions — not to wait for people to give them solutions, but for us to be creative with new products and new avenues to help protect the risks of companies, so that they can continue to perform in a normal operating rhythm. For us, we have to come together. That’s difficult, obviously, as you’ve seen due to COVID, where a lot of people aren’t getting together, and industry events are only starting to come back now. But when you bring together a group of senior leaders, and they have the ability to collaborate on behalf of customers, you wind up with some pretty special solutions that people find attractive — and it starts to shape the way that we have to think about the marketplace for the near term.
Q: What do you see as the biggest opportunity today?
To me, the biggest opportunity that we have is to get back to what I'll call a pre-COVID operating rhythm. I think there's a strong desire for companies and brokerage firms, employees and clients to want to have that happen. If we can do that and find ways to continue to do so in a manner that's safe — given the environment obviously around COVID — but if we can find a way to work together and to pull resources and lead, to me that's the best opportunity right now that I could see for this business to move, going forward, because it'll give us an opportunity to define what the marketplace should truly look like — for the next 12 months, 24 months, whatever time period you want to put along it. But to me, that is the biggest opportunity.
Q: What is the most pressing, emerging issue that you're concerned with today?
When you look at the economic outlook for the country, which you can broaden to the economic outlook globally. But we'll speak more to the U.S. — when you think about the insurance marketplace over the last three to five years, it's had its concerns around things such as inflation, escalation of litigation, changes in regulations — but all that was being done in a thriving economy. Now you have an economy that has some uncertainty associated with it. It's certainly led to supply chain issues and it's further heightened inflation to not just social inflation, but to other types of inflation, particularly around wage, and medical [inflation]. You're going to see many companies struggling to perform at a level, that from a shareholder perspective, is satisfactory. Further, a number of these events are outside the direct control of the boards of the companies that are running them. So, the ability to interact with members of the insurance community — whether it’s on the broker side, the carriers, or other facets of functions within those organizations that provide guidance — the risk is for us to predict the future. Using today’s data to help support those predictions, we can start to think about how we're going to navigate what I think is going to be a turbulent market over the next six months or so. To me, the most concerning aspect of the risks that I see right now is around that economy. How do we continue to stabilize supply chain, inflation, and wages so people can move forward with the long-range business plans they said a few years ago when they hoped a positive economic environment would sustain and grow with them.
