Insurance Industry Facing Greater Uncertainty Today
From climate change to geopolitical risks to cyber attacks, insurers are trying to navigate unsure ground. Here are the highlights of exclusive Insider Engage interviews with key executives at RIMS 2022 in San Francisco.
Insider Engage asked executives at RIMS 2022 how the industry was dealing with the growing uncertainty in the market. These are their edited responses:
Mike Fallon, President, Major Accounts, Liberty Mutual Insurance:
That's a great question, because there's just a ton of uncertainty. It's certainly a dynamic environment, with some of the geopolitical challenges that folks are facing, and in emerging risks, cyber and the like — although I'm not sure cyber is emerging anymore. One of the things that we want to make sure we do is know our clients as best we can and know their businesses and know their challenges, and show up collectively to provide solutions. We talk about Liberty being risk aware and not risk averse. The more we know about a client and the things that they're facing, the better prepared we are to work with them on solutions. And so that's how we're thinking about things.
Jon Monks, SVP, Business Development, Sompo International:
We're doing the best that we can. I certainly think that there is a lot of uncertainty, when you look from a geopolitical lens — what's going on in Ukraine and Russia obviously creates an enormous humanitarian toll that is horrific, and hard to look away from. But when you also look at the economic toll there, you've got the planes seized by Russia that are going to have potentially an enormous market impact; you're going to have supply chain with food supply with Ukraine being the breadbasket for so much of the world. And then you look at the way that climate change is impacting our industry — you've got a frequency of cat activity, you've got cat activity in places where historically there hasn't been any. You've really got to look at the models and determine whether or not the historical is really an adequate predictor of the future. We've really got to work to embrace things like technology and out of the box thinking, to really look at how we model and price risk going forward.
Mo Tooker, Head of Middle and Large Commercial, Hartford Insurance:
It's fascinating, because in many parts of the industry, we rely on models that look back. And a lot of those models just don't apply to what we're seeing today, whether it be COVID, environment, whether it be the the horrors in Eastern Europe. So I think really what we're doing is bringing that people power, if you like, to the data and the models, and I think that the combination of the two is really the way the industry will get through this, this time of uncertainty and complexity that we haven't seen before.
Hank Watkins, Regional Director & President, Americas, Lloyd's:
There's uncertainty everywhere. And I'd say you know, via social media, and the ability to look at your smartphone any minute of the day, and see what's going on around the world, certainly enhances the impact that we're feeling about what's going on around us. But I've not seen a more challenging time for humanity, or for our industry or for business in general. You think of all the systemic impacts that what's going on: in Ukraine, what's going around with with with climate change, potential cyber attack, supply chain — I'm not going to get into space weather, but we talk now about all the satellite junk up there, all the things that have been shot up in space over the years that are now flying around in orbit. And as more and more private spacecraft are launched, they have to be particularly aware of of what might be up there that they can hit. We've got a lot of challenges, both on the Earth and in space. But the beauty of our industry and I think the advantage of risk managers, especially at RIMS, is that they're better prepared now than ever to represent their company's risks and solutions to the boards that they that they are on — if they're publicly traded, or similarly, privately traded boards — they're much better prepared now, more credible in the way you represent the risks that your companies are facing and the solutions you can provide.
Dave Chmiel, SVP, National Director of Claims North America, HUB International:
Whenever we start working with a client, we need to truly understand who they are first, what's their culture about? Who are they about? It may be a healthcare client, or transportation and everyone is a little different. They have a little nuance, and with the uncertainty of the world, whether it be weather related, whether it be a potential new pandemic related, or COVID coming back. It's a matter of what if. So, the combination of risk services and the risk control team combined with the claims team, I think it's collaborating with risk managers, CEOs and owners — whether you're a 50 lives company or a 5,000 lives company — truly to sit down and say, Okay, we need to start today. We know hurricanes are coming. We know tornadoes are coming. We know a potential uptick in COVID could happen. Are we prepared? Are we prepared from an employee standpoint? If we lose half of our employee base what do we do. So I guess is that 'what if' factor. And that preventative — from the combination of the collaborative approach of risk services claims in the clients, with our carrier partners, to prevent the 'what if' going forward. We can't predict everything. But I think we have a good enough knowledge now, especially in the last five years, of what our major issues might be.
We talked a little bit about cyber too, that's really an uptick now, as well, with COVID really pushing those claims up. [Is] the next event going to be a cyber breach of some major catastrophe. So it's, again, working with those markets to prevent that making sure that your company, your IT security is as safe as it can be? Making sure your employee base knows there's a loss coming? Where do I go? How can I communicate with fellow employees? How can I make sure my family safe? And I think that that the onus falls on us, as a claims organization, consultatively, to work with our clients to make sure that happens.
Rohit Verma, CEO, Crawford & Co.:
I think that there have been uncertainty in the world all along. I think that we have a different picture of that now. I think the industry is doing a fair job. I won't say that we're doing a great job at managing the uncertainty, but I think the industry is doing a fair job of really understanding what is beyond the horizon and trying to anticipate it. But I believe there's more work to do for us in really understanding how that is going to impact our lives, how that's going to impact our risk profiles, how that will change how risk at price today. So I do think that more work is needed for us to really understand the uncertainties that are around the corner that are going to come and how they will change our lives.