Aon CEO Greg Case has commented that the pandemic has amplified the need for the insurance industry to innovate, with the executive suggesting not enough is being done to meet clients’ needs.
Speaking at S&P Global Ratings’ annual conference today, Case noted that risk placement as a percentage of GDP has decreased for the past 30 years. He said this is because the industry has not done enough to meet clients’ needs for risks such as intellectual property, cyber and climate.
“Cyber is a $7bn, $8bn premium programme now across our industry,” he commented about cyber risk. “When our clients are facing upwards of $600bn in potential connected loss, we are not doing enough. Fundamentally, we are becoming less relevant in the context of client need, which continues to go up.”
Aon last year announced a deal to acquire Willis Towers Watson days before the Covid-19 fully took hold in the US and Europe. The mega-merger is progressing towards receiving final regulatory approvals, with some additional divestments in the US, Australia and New Zealand possibly needed for the deal to close.
“Aon Willis Towers Watson, in our view, is the best step we could take to help break that trend [of becoming less relevant],” Case said. “Everyone benefits because we want to create net new – net new in climate, net new in intangible assets and intellectual property, net new in cyber, net new in pandemic, which we’ve got to be able to think about.”
He added: “The pandemic amplified every reason we’re doing Aon Willis Towers Watson. It increased the need for innovation, and increased the awareness and understanding of the need for innovation. So that’s really what we’re trying to accomplish as we hopefully close our combination as early as possible in the third quarter.”
Case commented that the risk has traditionally been “essentially assessed in the rear view mirror” by the industry, by looking at historical loss profiles.
“But you can’t do that with cyber, intellectual property or climate,” he said. “We have to have analytics that are forward-looking, that are compelling enough that in fact capital will come in and commit to create net new market.”
He added: “How do you take a cyber market from $7bn or $8bn and make it $25bn or $30bn. How do you take an intangible asset market, which is largely nothing and actually make it a $100bn market. That’s doable and within reach if we can develop and drive the analytics to do that.”