American International Group Inc. executive Robert S. Schimek is president and CEO of the Americas for AIG's property/casualty insurance business. He took that role last year when AIG restructured its leadership following the departure of several senior executives to Berkshire Hathaway Inc. Previously, Mr. Schimek worked in London, where he headed the insurer's Europe, Middle East and Africa business, and prior to that he was chief financial officer for property/ casualty. Recently, he spoke with Business Insurance Editor Gavin Souter about the outlook for AIG and its recently introduced expanded cyber risk coverage. Edited excerpts follow.
Q: What are some of the key growth areas for AIG in the U.S.?
A: In general, right now we see the energy and transportation sectors being quite strong, and we're continuing to see expansion in construction as the economy continues to improve. So our construction casualty business in particular has really poised itself to grow in the areas of infrastructure, which would include both social and civil infrastructure, health care, technology, manufacturing, communications, utilities and power. Those sorts of areas are the places where we're ramping up to grow from a construction perspective.
From an energy construction perspective, we see opportunities including power generation, solar and wind renewable energy, as an example, and oil and gas including the liquefied natural gas export and import facilities and pipelines, and of course petrochemical facilities.
Q: How do you think recent cyber breaches have affected the demand for cyber insurance?
A: Clearly, we'd say that more and more businesses realize that the potential severity of cyber risk — especially as the threats extend beyond data and reputation into the possible effects on critical infrastructure — are expanding. So we've responded with a product, which provides coverage for our customers in the event that a cyber attack or data breach leads to property damage, bodily injury or financial loss. The coverage is available across industries, including for critical infrastructure companies.
Q: Is that something you've seen demand for? Have people been asking for that coverage?
A: Yes, and we're not really aware of any other insurer who is providing coverage like that. Just as a general backdrop, the volume and the financial effects of cyber breaches have continued to increase significantly, with frequency and the severity both increasing. So we think there's a rapidly growing awareness in the C-suite and at the board level about addressing cyber threats.
So from our perspective, this idea of physical loss or financial loss is an emerging element of cyber. When we first developed coverage for cyber, we probably did it more from the AIG view of what makes sense to provide in terms of coverage. Over the past couple of years, we've been trying to put ourselves much more into the shoes of the insured and asking, “What is it that you're looking for?”
Q: AIG has become a much more streamlined organization. How has that affected your division and your ability to provide services?
A: We've invested a lot of time, money and resources into information systems and into our operations. What we've been really trying to do there is to develop a more efficient back office that really does a couple of things. One, it's more cost-effective ... and we've invested a lot in letting the customer be at the center of what it is that we are trying to develop.
To the extent that we can develop our processes and services in a way that feels better from the customer experience perspective, the opportunities for us, quite frankly, are significantly improved.