Insights form RISKWORLD: Chubb's Greenberg discusses geopolitics, climate in keynote  May 9th 2024

Chubb's Greenberg discusses geopolitics, climate in RISKWORLD keynote

Evan Greenberg delivers the Tuesday morning keynote at RIMS RISKWORLD 2024.. During his keynote, Greenberg said he believes the issue that is most pressing in the medium-term is the national deficit.

The economy, litigation costs, global geopolitical issues and climate change were just a few of the topics of conversation during Tuesday morning's keynote address from Evan Greenberg, chairman and CEO of Chubb Group, at RIMS RISKWORLD in San Diego. The discussion with Greenberg was hosted by Eric Anderson, president of Aon, who began by asking Greenberg about his outlook for the U.S. economy.

"It has a lot of resilience, a lot of strength to it," Greenberg shared. "We're not reliant on any one sector, any one area of the economy, and broadly it's doing well. Manufacturing services; slowing down a bit. I think Fed policy is beginning to take hold. But my own mental model is that this inflation is unlikely to return to the Fed target of 2%. We're going to live more permanently in a higher inflation world."

Greenberg attributed this to things like climate change, energy transition and a protectionist mentality in much of the world.

"We're in a more protectionist world where countries, our own included, are putting up tariffs, blocking other products from entering the country on protectionism is going to grow. That is inflationary, and that is a trend around the world," he said.

The issue Greenberg believes is most pressing in the medium-term is the national deficit.

"It's not about the Fed," Greenberg stated. "It's about Congress and their ability to rein in spending. It's about our ability to deal with entitlements. And our debt service costs this year will exceed our military spending, but it is unsustainable."

He said that China has cut the amount of U.S. Treasuries they buy by more than half, and the Japanese are buying less, as well.

"We are monetizing our own debt, so we rely on ourselves to do that," he stated. "That crowds out money for innovation. That crowds out an ability to grow."

On the topic of nuclear verdicts, Greenberg emphasized the scope of the issue and how it affects inflation.

Moody's analysts pick out 10 big risks facing insurance industry

Climate is just one of the key issues…

Moody's analysts pick out 10 big risks facing insurance industry

Climate-related disasters rank as just one of the leading factors turning the insurance industry on its head.

Complications with global supply chains, an increase in cyberattacks and the rise in geopolitical conflicts also are on the list of the top 10 challenges facing insurers, analysts at Moody’s Corp.’s insurance-solutions group wrote in a paper entitled “The 10 Major Risks Shaping Insurance Today.”

“Supply chain shocks, the overhang of the pandemic, and geopolitical risk has escalated economic issues that have been largely benign in many countries, driving inflation, wages and raw material price rises, with insurers reaching for an inflationary business playbook that they haven’t used for 20 to 30 years,” according to the report.

Historically, insurers have considered stress tests from a “singular perspective” and now they’re being forced to grapple with an “increasing complexity of risks,” said Michael Steel, general manager of Moody’s Insurance Solutions, in an interview. full article

Risk managers must take lead on AI: Panelists

Artificial intelligence will not change the risk a company faces, only the amount, so risk managers should be proactive in assessing how the technology aligns with an organization’s risk management strategy, industry experts said Monday.

“AI and machine learning are the great innovation risk, and we need to get in front of it,” Alliant Insurance Services Inc. Senior Vice President CJ Dietzman, who is based in Charlotte, North Carolina, said during a session at Riskworld, the Risk & Insurance Management Society Inc.’s annual conference.

One of the benefits of AI is that it can accelerate data processing, making some jobs easier, said Robert Horn, an Alliant first vice president based in New York.

Lillian Russell, chief privacy officer of Los Angeles County, agreed, adding that AI can be used to find data within data and modernize and enhance functions.

“The technology is here, the question is how do we use it and infuse it into various lines of business,” she said.

To manage the risk posed by using AI, risk managers must understand how the technology is being used and engage with the right stakeholders in an organization, Ms. Russell said.

Risk managers must also be aware of the kind of data being provided to third-party vendors and how it is being used, because liability cannot be outsourced to vendors, said David Finz, an Alliant vice president based in New York.

Mr. Horn added that it is critical to review controls, policies and procedures for contractors retained to provide services involving AI.

May ITL Focus: Customer Experience | Insurance Thought Leadership

My request of insurance companies for some time has been that they provide a customer experience like airlines do.

That surely sounds odd. Airlines are known for awful service. But they've started doing a small thing that I find useful and that insurers should aim to duplicate.

Whenever I have to change planes--and having Sacramento as my home airport means I have to change planes to get just about anywhere--I have a text notification waiting for me when I land, telling me what gate my next flight leaves from and what the estimated departure time is.

Now, I'm fully capable of walking down a couple of gates and finding a board to consult, but the notification saves me at least a little time and can either provide some reassurance if I find myself with a tight connection or let me know I'd better hustle. The text also suggests that the airline is paying attention to me and maybe even cares--though decades of sometimes heavy travel have taught me otherwise.

If airlines can send those texts and if FedEx, UPS and the U.S. Post Office can now let us track where a package is at any moment, why can't insurers keep us posted about the status of a policy application or a claim?

I'm not suggesting anything fancy, at least for now, just something like: "We received your application, are reviewing it and expect to get back to you within X days." Or, "We've received your claim. are gathering information on replacement parts and will update you in X days."

I realize that updating customers on a policy submission, let alone a claim, is far more complicated than telling me what my next gate is. I also realize that some insurers have started moving in the direction I'm suggesting. But I've also seen that customers don't care much about the complexity that companies have to overcome. They've become used to the notifications from delivery services, airlines and other businesses are doing and will hold everyone to that sort of standard.

In this month's interview, Denise Garth, chief strategy officer at Majesco, takes my request a step further. She says companies have to get beyond the focus on digitizing and removing friction for customers. She says delivering a great customer experience now has to start with the actual products and services we sell. They have to be personalized.

We need to be "looking at risk more individually and at how customers live their lives," Denise says.

Paul Carroll, Editor in Chief, Insurance Thought Leadership

CNN article focuses on rising complexity of collision repair

A recent CNN Business article focused on the rising complexity of collision repairs, even for minor fender benders, due to the increasing use of technology in vehicles.

“The change that we’ve seen in the last five years is greater than we’ve seen, probably, in the last five decades,” said Todd Dillender, chief operating officer of Caliber Collision, in the article.

Advanced driver assistance systems (ADAS) including automatic emergency braking (AEB), blind spot monitoring, and lane departure warning can increase repair costs by up to 37.6% after a crash, according to a recent study by AAA.

“Even minor damage to systems such as front radar or distance sensors can result in additional repair expenses up to $1,540,” the study says.

The increase partly comes from the cost of replacing and calibrating sensors, it said.

While OEMs are adding more ADAS features, the National Highway Traffic Safety Administration (NHTSA) is also demanding it.

NHTSA recently finalized a new Federal Motor Vehicle Safety Standard (FMVSS) that will make AEB, including pedestrian AEB (PAEB), standard on all passenger cars and light trucks by September 2029.

AEB systems use sensors to detect when a vehicle is close to crashing into a vehicle or pedestrian in front and automatically apply the brakes if the driver doesn’t. PAEB technology detects a pedestrian in both daylight and at night.

Dave Gruskos, Reliable Automotive Equipment, Inc. president, told Repairer Driven News the evolution of technical advancements that started with companies, such as Mercedes-Benz, 25 years ago used to take a decade or more to become industry-wide. He said now, similar advancements can be widespread within a year of introduction to the industry.

“Everything is evolving to the next level,” Gruskos said. “There is no simple vehicle.”

The CNN article talks about the importance of having the technology repaired correctly.

“You’re changing the way the sensor looks out in the world,” said Hami Ebrahimi, chief commercial officer at Caliber, in the article.

Cost-cutting driving a wedge between insurers and their legal counsels – AM Best

Despite becoming increasingly entangled in legal battles, insurers are becoming more at odds with their defense attorneys due to cost-cutting measures.

This escalation was noted by the American Property Casualty Insurance Association (APCIA) as a top concern, prompting insurers to enhance reserves to cover social inflation costs, and modify insurance terms by raising deductibles and accelerating rate hikes across various lines.

According to a Best’s Review poll called “State of the Defense Counsel” involving members of Best’s Insurance Professional Resources, certain cost-cutting measures by insurers may be undermining their legal defenses.

The survey revealed growing friction between insurers and their external legal counsels due to stringent control over legal expenditures. This includes the enforcement of billing caps, adherence to stringent litigation guidelines, and delayed payment schedules.

Phil R Richards, a partner at Richards & Connor PLLP in Tulsa, Oklahoma, highlighted a shift in dynamics.

“The thing that started driving the deterioration was the change that I saw in the insurance industry, [that they were] referring to panel counsel as vendors rather than their lawyers,” he noted.