Earlier this year, we had the opportunity to put questions to the global leaders of Gallagher Bassett, capturing their thoughts on the challenges – and tactical solutions – facing the insurance industry. Our panel consists of:
Pete Diskin – Chief Client Officer, United Kingdom
Jon Winsbury – Executive Vice President, GB International
Michael Hessling, Chief Executive Officer – North America
Craig Furness – Managing Director, New Zealand
How do you think COVID-19 will change the face of the insurance industry?
Hessling: It will permanently change the way we work i.e. more use of virtual collaboration, virtual meetings. It will redefine how we recruit, train and build our talent pipeline. It will also lead to broader discussion of enterprise risk management and the importance of business continuity planning.
Furness: The changes that we are seeing right now as a result of COVID-19 are having impacts that we haven’t seen play out fully yet. I really think that the way we’ve had to adapt over recent months will have long-term and positive impacts on the way that we interact with our own people and our clients.
Diskin: There is no doubt there will be movement in the capacity available to meet coverage which will influence premiums. From a claims perspective, the ever changing complexity and need for specialist handling and response is set to continue and increase as additional skills and experience are required to respond.
Winsbury: Too early to call – short term it could have a flow on effect to capital availability if economies are weakened. It may also assist in attracting new talent into the industry at more junior levels because insurance is a relatively resilient industry.
This has been a huge year politically, socially and financially for all countries. How do you think 2020 will be remembered?
Furness: I suspect that 2020 will be a year that will be seen as an aberration due to how unusual the circumstances have been. However, I also think that it will be seen as the catalyst for some important and far-reaching changes and enhancements, not only in our industry, but across the whole economy and market.
Hessling: How 2020 is remembered will be deeply personal and unique, but also shaped by when we reflect upon it. For me, I will certainly remember the challenges and volatility of 2020 on a professional and personal basis. However, I also believe I’ll view 2020 as a time of great resilience and innovation which will undoubtedly shape me, my family and even our business in significantly positive ways.
Diskin: It will be long remembered across all of those areas. From a business standpoint, I think it will be a year where the world came to a standstill, it triggered an immediate review of existing practices, processes and costs to deliver services. It also forced change in the way we work, be it communication, the way we are resourced, critical function response and ultimately how we manage business sustainably going forward – with our customers at the centre of what we do.
Winsbury: 2020 is truly the year that all business continuity plans were proven true or false. Some companies have collapsed, while others have landed straight on their feet because the strategies and processes in place were developed and executed with success. GB’s business continuity plan was tested just like any other, and gladly, ours was proven true.
What is one type of insurance you believe all business should have?
Furness: Employee benefits for their people. Many people don’t look after themselves well enough, so if businesses can help address the chronic underinsurance issues many people face by facilitating insurances such as life, income protection or medical cover, they will be helping their people out in a really tangible way.
Diskin: While there are many coverages that link to ‘people’ risks, the key for me is having cover in place to protect the key asset which is ‘people’. Be that from a ‘key man’ scenario, accident and illness, travel, protections including E&O and D&O are critical and so on. Having the necessary cover in place will remain a challenge.
Winsbury: A profitably run business should engage a broker and an insurer. Have good housekeeping, understand your business well and do that through a reliable broker and insurer. Have you, as a business, assessed your risk and if you lack the skills to do that have you engaged a good quality professional?
Hessling: Historically, general liability claims have often been viewed as a nuisance or cost of doing business for many organizations. I believe more organisations are recognizing that liability claims, and how they are managed, are an extension of their brand and an important opportunity to shape perception and demonstrate their culture and values to customers.
Is there any class of insurance that is underrated/ where you believe more businesses need to focus on?
Diskin: Business Interruption and having sufficient coverage will remain critical and if not more critical than ever following COVID. For a business of any size, insuring its inability to trade, loss of profits etc can be the critical determining factor in solvency following catastrophic losses, pandemics and the like. Whether you are a small-to-medium-business or at the top end of town, having sufficient coverage is a critical coverage that you realise the value of when a loss or event occurs.
Hessling: The implications of COVID on Workers Compensation (WC), specifically how to adjust forecasts given the changing exposure base in WC as well as the introduction of far-reaching regulatory changes related to COVID compensability presumption. Additionally, the financial impact of COVID for businesses and the gap in coverage for business interruption policies.
What would you say is the biggest insurance trend for the 2020/2021 financial year?
Diskin: Whether it’s a trend or a market cycle, but the raising of rates (market hardening) continues in most lines of coverage. With that, insureds are being affected not only by rising insurance premiums but reductions in coverage within policies. This ‘market hardening’ is really placing pressure on brokers to ensure they secure adequate coverage within the insured’s affordability and the necessary balance that needs to be struck.
Hessling: Insurance is vital for businesses being able to transact and operate. We are attracting an influx of diverse talent in the industry who will bring fresh perspectives and ideas. Given the financial importance inside our industry, there’s tremendous opportunity for innovation and disruption over the next 10 – 20 years.
Winsbury: The biggest question is travel insurance and how that will affect the industry, pending when travel will re-emerge. The other thing will be a constant hardening of premium at the same time as insureds are dropping off (premium goes up because there are fewer companies insuring).
Furness: Technology will certainly feature as a prominent insurance trend this financial year. From increased digitization to artificial intelligence capabilities, there is no doubt that technology will be the focus to ensure carriers and TPAs deliver tailored outcomes to customers based on their specific requirements, regardless of the complexity.
Why do you think the insurance industry is ‘the one to watch’?
Diskin: Time and time again the insurance industry is the unsung hero of the financial services world. Without insurance, the world would struggle to get back on its feet and continue. The insurance industry as a whole is really the oil that gets the economy’s wheels turning and protects interests long term, should events like COVID happen again. And in the absence of that, protecting the futures of everyday people as they go about their livelihoods. Why should it be watched? Well, there is no doubt that as a result of pandemics like COVID, innovation will occur and is occurring within the industry, which will benefit everyday people and corporations against emerging risks. With that the insurable world continues to grow.
Winsbury: It’s always been the one to watch. As businesses expand around the globe, the one thing they will always need is insurance. Insurance may not be a growth sector, but it will always be resilient.
Furness: Quite frankly, it should always be the one to watch. The business world does not operate or survive without insurances – it is as simple as that. Take a look at this year as the perfect example of how critical insurances are to business continuity right around the world.
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