- Its hail season now, and I have some new stuff to share on that.
- Wildfire season is here now, too, and there is a post on that, coming soon.
- And, Houston has been flooded again so we need to revisit the challenges of underwriting flood in that city.
But, deciding what to write first was easy once I saw this video from AM Best at RIMS. Meg Ryan hosts an executive panel discussion that includes Kelly Lyles (XL Catlin), Rob Shimek (from AIG, who has provided much foundation for this blog in the past couple months – thanks Mr. Shimek!), and Inga Beale (Lloyd’s).
The first question is a standard ice-breaker about the state of the market, and the responses show the panel limbering up for the real conversation. (For the record, the consensus is that the markets are competitive, while showing signs of hardening.)
The second question is about the challenges facing the industry (a near-platitude of a question), and the responses are worth a bit of exegesis. Ms. Beale, the CEO of Lloyd’s of London, responds first (at 4:01, quoted at length):
“[…the challenge] I like to focus on a lot is the rapidly changing world. Many insurers have been around a long time – Lloyd’s Market has been around for 328 years – a lot of history there. And a lot of us are fixed in our ways. We’ve got huge legacy systems that can sometimes slow us down. My concern is that the world isn’t going to wait for us. Particularly for Lloyd’s, we’re looking at some of the new markets around the world. They are moving very, very fast and one of my fears is that we are not going to be moving fast enough… [My fear] is that we’re just a bit too slow to react. We’re not quick enough to give new products…and keep up with the pace of change.”
When the CEO of the oldest insurance market (328 years of rich heritage and tradition) laments being “fixed in our ways,” and comes close to describing their experience as a handicap in today’s world, that is startling.
Mr. Shimek then takes the baton and runs with it into how insurance needs to be able to change along with the nature of risk, using the internet of things as an example. He adds: “One of the biggest challenges for all of us is to continue to invest in innovation, continue to look for ways to provide tomorrow’s solutions.”
Innovation (disruptive or not) is a hot topic in insurance lately, because there is a perception that the industry is falling behind other similar industries (like banking and financial services). While there is plenty of insurance innovation happening, and more to come, hearing the need for innovation enunciated so clearly by this panel is a call to action. If AIG and Lloyd’s are asking for innovation, innovation will come (or else).
The final part of the conversation is about opportunity, and Ms. Beale goes to the protection gap. As I did with Mr. Hemant Shah of RMS when he identified the gap as a growth opportunity, I applaud Ms. Beale for this response. It is so easy to talk about new opportunities in cyber-risk and other exotic risks, but to neglect the protection gap, especially for cat perils for which the necessary data and analytics actually exist, is to forego enormous opportunity for no discernible reason beyond inertia and tradition – the very trait Ms. Beale talked about as being a challenge for Lloyd’s of London earlier in the discussion. Identifying the challenge demonstrates a desire to meet it – and the insurance tech industry is rallying to help.