Insurers that resist change will be consigned to past as industry reinvents itself
The insurance industry is going through an unparalleled period of change at an unprecedented pace and chief executives unwilling or unable to embrace this rapid development in their markets may not find themselves in their role for long. They must embrace change or get left behind.
That is the view of David Sampson, president and chief executive of the Property Casualty Insurers Association of America (PCI), speaking ahead of the trade body’s annual event being held this year in Chicago.
He said the conference’s title, ‘The Future of Insurance’, and entire event programme has been developed to reflect this challenge the industry is facing. He stressed that it is an exciting time for insurers but they must be willing to keep pace with developments.
“The pace of change is unprecedented. There has always been change but it used to take decades for new technology or social changes to take root.
“Everything is now accelerated leading to disruption that is cross-cutting many segments of society and on a global basis,” Sampson said.
“All this is having an impact on insurers’ businesses, the risks in the economy and the way consumers think about insurance. We have designed this programme to help members explore the opportunities we see around us and on the horizon. We will examine what we can be doing to innovate and what insurance is going to look like over the next decade.”
He explained that PCI works directly with a panel of chief executives to set the topics and select the speakers at the event.
They made the decision to try to reflect some of the dislocation in the industry at the moment and the wider uncertainties in the world, whether this is the UK leaving the EU, Catalonia potentially breaking away from Spain or the tensions between the US and North Korea.
“In the next decade we anticipate pretty dramatic changes in the industry and the global economy and our members will need to adapt what they look like as companies and what they sell. That is a fact of life,” Sampson said.
“CEOs unwilling to embrace this future and take advantage of the opportunities it brings will not be in the chief executive’s chair for very long.
“We have an optimistic view of the many innovations taking place and the possibilities they hold for the industry. As new risks emerge, we find new ways to interact with customers and we are able to price risks more accurately.”
He also stressed the very real risks that face companies and the industry as a whole if change is ignored. “History has proved in often dramatic fashion that industries that try to resist market forces and technology forces do not fare very well in the mid to long term. They have certainly not fared well compared with industries that have embraced opportunities and reinvented their companies to take advantage.”
Sampson added that opportunities will arise for the industry as new risks emerge and new products are designed to cover them. The sharing economy is a new concept that did not exist a few years ago but this is presenting opportunities to insurers, he said.
He also noted that there was still a big job to do in making businesses and consumers more aware of the risks they face and what they can do to protect themselves. He said the scale of the protection gap—the difference between economic and insured losses—apparent in some areas in the aftermath of the recent hurricanes, highlights this challenge.
“In some areas hit by Hurricane Harvey it emerged that something like one in six homes had flood insurance. That is a big opportunity for the private sector to do a better job in looking at how flood is covered and perhaps working with the government in penetrating that market more effectively.”
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