‘Our industry is boxed in,’ warns Andersen
By Jen Frost
Aon’s President Eric Andersen is an intermediation leader who recently warned that the insurance industry is failing to meet the changing needs of its customers as intangibles boom and insureds face transitional challenges globally. .
Addressing hundreds of brokers attending the 2023 CFC Summit in Chicago on May 18, 2023, Anderson said, “Over time, we’ve gained traction with our customers, and they’ve given us We’re losing what we really want,” he said.
Andersen warned of several areas where the industry is in short supply and could be in trouble.
- Finding Solutions for Clients’ Growing Intangible Asset Needs
- Helping clients meet the challenges of climate change
- No action possible for government to intervene
- So far complacent about geopolitical risk
- lack of capital and confidence
Challenge to intangible assets
According to Andersen, one of the hurdles for the insurance industry has been its failure to address the intangibles challenge and offer products and solutions related to customer concerns.
“Our industry fits the bill, makes money where it counts, and understands what the claims business is like,” said Andersen. “When I sit down with our client CEOs, [understand] We don’t really care about their strategy and how they think about it.
“People always ask me what’s keeping you up at night. It keeps me going.”
Andersen also noted a “fundamental shift” in how companies view happiness and talent.
“This is an area of constant debate in our industry,” said Andersen. “And I would argue that as of today, it’s mainly a dumpster fire situation assessment.”
Aon President Eric Andersen Talks Climate Change Challenge
Markets may be responding, but the lack of insight at the moment could be holding back much-needed funding for climate change, warned Andersen.
“The honest answer is that we are not ready yet.” [to help clients] Because we don’t have insight, which is why we’re investing more and more in capabilities, but by nature we’re trying to match risk with capital,” Andersen said. said Mr. “But if you look at the capital across our industry, $3.5 trillion going to property and casualty insurance, he’s $4 trillion, but that’s not enough to solve the climate problem. is not.
“We need substantially more capital, we need sovereign wealth funds, we probably need PE, we need wealthy people, we need a fairly large pool of capital, but that capital is actually Unless there is an opportunity to make money, they don’t come in. I understand the risks involved.”
Aon also shared concerns that if governments were asked to help address gaps and transitions in climate protection, “we are very concerned that we might miss this.”
“We don’t need government support, we need investments in our ability to prove to our capital providers that we have a profitable opportunity and to our clients to prove our ability to help them manage the volatility of the transition.” said Andersen. He said.
President Aon said: “Our ability to help them navigate this issue is one of the biggest challenges facing our industry over the next five to 10 years.”
Aon’s president warned that customers need to understand that the insurance industry should play a supporting role, not a setback in the midst of change.
“We judge them by what they do today, but we don’t really support their new products and innovations,” said Andersen. “We don’t want to do offshore wind, and you don’t want to do unproven technology either. Well, that’s the transition.
“We can’t really say we want them to transition if we are not going to help them. There is, but we need to start on it.”
Understanding Geopolitical Risk
Geopolitical risk has surged in importance to businesses, further amplified by Russia’s war on Ukraine. The 2023 Global Risk Perceptions Survey of 12,000 global business leaders conducted by the World Economic Forum ranked geoeconomic conflict as the third biggest risk in terms of short-term impact.
“I was actually looking back at the support presentation material that we put together about five years ago, and we had a goal of triple our business in China. , we’ve been looking at business growth, but we’ve barely made it. Take the geopolitical risk into account,” Andersen said. “You have been sitting here today for a year, [it’s a] A substantially different framework.
“Business model, talent and geopolitical issues came to our client’s mind.”
Despite the current grim assessment, Andersen said positively that there is great opportunity for the insurance industry to rise to the challenge.
“When you look at all these risks, some people say, ‘You can’t do that,'” said Andersen. “I think that is completely wrong. There is such an opportunity for us as an industry if we can really use all the different features…to try to provide private market solutions to our clients who are working on these issues. Focus on that, or your clients won’t go anywhere.”
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