What do you see as the major risks facing the industry today?
The world has become more and more complicated, and it's becoming more complicated every day. Certainly we are concerned about the war that's happening in Ukraine and Russia, and our thoughts and prayers go out to everybody that's impacted by the war, which is going to create a lot of interesting geopolitical risks in the industry. Not to mention, there's always the risk of natural catastrophes, which continue to grow — whether you believe in climate change or not — but you can definitely agree on the fact that the natural disasters are getting much more devastating. You certainly see some emergence of what I would call non-modeled risks that that are happening, tornadoes and hail have been non-modeled risk for a long time. And in the industry, particularly in the US, we really suffered from tornado and hail over the last several years, because the extent of damage from them has really increased. More recently, we've seen the emergence of forest fires, which continue to be a non-modeled risk. And, frankly, we believe that it has pushed certain insurance carriers to really rethink and relook whether they want to even insure that risk, which I think is a real, real problem and concern.
I'm sure you've had a lot of conversations about cyber, which I think continues to be an extremely hard-to-model risk. The challenge with non-modeled risk always is that if you can't model something, then it becomes really difficult to price it, then you actually don't know whether you're pricing it appropriately or not. It's only a matter when the claims emerge that you really start to understand what the cost of that risk really is. And that's when you see the rate increases and rate changes that we hear about in the industry.
Finally, I think the biggest risks that we face is the risk of talent, right? We as an industry have not invested enough in bringing new people into the industry. We do face unfortunately, a structural challenge in our industry, that not many people from college are they're saying, oh, I want to get into insurance. That's that's really what I want to have my career — we do have some, but not as much as some of the other industries enjoy. And I think that we could have a potential real shortfall of talent. I think that there are parts where we, as an industry, don't do ourselves, frankly, any favors, because we're out there talking about technology, which we should always be talking but we talk it in context of eliminating jobs, as opposed to really augmenting what we do. And I think that scares some people away from the industry.
Do you think technology will replace people or it just makes their life easier?
We sell a product that we hope nobody ever has to use, right? As an industry, we hope nobody ever has to have a claim that they suffer. But we want to make sure that when they do suffer a claim that we are there for them. And I think that the human element of that is extremely important. If if your home is damaged, or your your car is damaged, or God forbid, you're injured, you don't want a robot or some sort of a text telling you that everything will be okay, you actually want someone to put their arm around you and say, Look, we're going to take care of this, we're going to restore your life back, we're going to put things back in perspective. And I just don't think that we are at a point where we're ready to take the empathy out of what we do. And we all know machines can't have the empathy, the empathy comes from people. So I don't think that people can be replaced. That last mile, which is the communication that you're having, having with the policyholder or the claimant, I think is extremely critical. And having a human interface to that is extremely important. Now, you want the communication to be efficient. You want the claim process to be efficient, but I don't think you want the human element out of that. So I don't think that machines will ever replace human beings. I think they're going to change the way we work just like if you look at the employment rate 30 years ago, when email was not as prevalent versus email today, people thought once email is there, then are you really going to need all the work and look at we have more emails today than we can handle. And we need more people to handle that volume. So I think technology has a way to evolve. And we figured out ways to work with technology to make us better and deliver a better product to our customers.
Speaking of technology, we've had a major shift with COVID. Can you talk about the new normal and what that means?
Look, I actually don't like to talk about a new normal because I don't think we know what the new normal is going to be. I always say that we've just had a shock to our lives, right? We as an industry have talked about pandemics about a very long time we've had pandemic coverages or exclusions because we expected something like this to happen. Yet we as an industry, or for that matter industry at large, has really struggled while we've done a great job in terms of getting work done making people remote giving people access to technology so that they could work. The video conferencing — which had never really taken off as well as it did, during the pandemic — I think we really altered the way we work, we really altered our lifestyle. And I think it's gonna take us time to really understand what the new normal will be. I still think that we have people who don't want to come back to work, who feel like they can do their job really well from home. We have people on the other hand, who feel that you can't really build a culture until you're in the office. And then we have people who who are still concerned about their lives because the pandemic in some ways is still out there. And they have loved ones who maybe immunocompromised or they themselves could be immunocompromised, and they want a different way of working. And we have proven that there are ways to work remotely. So I don't think so that we're ready to really have a new normal yet, I think we have to sort of rehab our way out of this shock that we got basically mentally and physically, frankly, and it's going to take some time before we really realize what the new normal is going to be. So the approach we're taking is to sort of ease into that we're allowing our teams to have the flexibility to work from wherever they need to, of course, our clients are important, come first and we are making sure that we are doing everything we can to meet our client commitments.
