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Patterns used to assess risk are being disrupted: III C-suite panel

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Left to right: John Huff, Richard Creedon, Paul Horgan, John K Smith and Rohit Verma
Photo: Don Pollard

Insurance executives warned that in the current economic environment, it is increasingly challenging to use patterns to assess risks, with the Covid-19 pandemic, supply chain crunches, workforce shortages, climate change, social unrest and new cyber threats being part of a new reality.

Speaking during the Insurance Information Institute (III) Joint Industry Forum 2021 last week, executives said that as historical trends get disrupted, pricing and reserving is becoming a harder task for insurers and brokers across the US.

“All the data is doing is looking at patterns, which have already [occurred], and those patterns are disrupted,” said Rohit Verma, the CEO of claims manager Crawford, and a former Zurich NA and McKinsey executive. Verma was speaking on a C-suite panel that focused on the topic of resilience.

“I think legislation, underwriting acumen. . . [have] to really come together to figure out how we're going to handle these issues that are emerging, particularly which are causing what I call systemic risks,” he added.

Talent in the industry

Panelists also discussed the shortage of talent in the insurance world as the industry ages and insurers struggle to find the workforce to expand organically.

“We will see the ‘great retirement’ in this industry,” said Paul Horgan, who is the head of commercial lines for Zurich North America.

Executives highlighted the importance of apprenticeship programs to attract and retain young employees, but they also commented on the relevance of diversity in the industry.

“We are also very much interested in expanding our pool of talents and [being] much more transparent as to where we are in that journey of being diversity community inclusive,” he said, adding that the company is posed to publish a diversity report with diversity stats by job description.

“It's a way for us to hold ourselves accountable,” he added. “It's a journey and it takes a lot of effort, a lot of focus, but it's necessary because of the risk of resignations, and because of the brain aging.”

Commenting on the matter, John K Smith, the president and CEO at Pennsylvania Lumbermens Mutual, said that internships and apprenticeships in the insurance industry are making a comeback after years of talent underdevelopment due to budget cuts.

“So, when someone leaves, the only recourse that we as an industry have [currently], is to go get someone from the outside, from another company,” he said.

“We end up paying 5%, 10%, 15% more [and] drive the expense ratio for the industry – because that's what ends up happening,” he said, adding that we need a “paradigm shift”.

Talent shortage has been one of the most commented issues during the last insurance conferences in 2021, with executives at CIAB, for instance, also deliberating on how to bring junior and mid-level staff back to the office after more than a year of working from home.