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NEW YORK — Insurance industry CEOs said rates and pricing are rising in the commercial insurance space, and technology is seen as a useful tool rather than an existential threat.
“Been bullish, will be bullish,” said Daniel Glaser, president and CEO of Marsh & McLennan Cos. Inc., speaking Thursday at the S&P Global Ratings 35th Annual Insurance Conference in New York.
The world is becoming more complex, and risks are rising, Mr. Glaser said. “The age of risk has really just begun,” he said. “There is a risk wave coming our way that includes climate change and adaptation, water scarcity, the impact of (artificial intelligence) and robotics.”
The room shared Mr. Glaser’s sentiment, with 63% voting they were bullish on the sector, according to moderator Julie Herman, a director in New York for S&P Global Ratings.
“I agree the world is more complex,” said John Haley, CEO for Willis Towers Watson PLC. “There are more risks out there.”
Mr. Haley added, however, that “macroeconomic factors” are the greatest opportunity and risk. “When you think about it, it’s a healthy economy, which is producing new services and products, which give rise to more complex risks.”
“The demand for the product is not going away,” said Gregory Williams, president, CEO and co-founder of Acrisure LLC, adding that gross written premiums have risen each year, except 2008 and 2009, since the firm began tracking the data in 1996.
“The fundamentals of the industry are very compelling,” Mr. Williams said, including high revenue and margins and low capex (capital expenditure) requirements. “There’s not many other places you can go that have those pillars and those dynamics.”
“Risk is booming," Brian Duperreault, president and CEO of American International Group Inc., said in a separate address after the brokers panel. “We have rising uncertainty across the whole world. It’s producing a world of increased risk.”
Pricing in the property/casualty space is firming upward recently, the broker CEOs said.
“There is a slight tailwind with rate right now, a couple of percent,” Mr. Williams said.
April data from Willis Towers Watson showed 14 lines of coverage with high single-digit to low double-digit increases, nine lines roughly flat and two decreasing – surety and international casualty, according to Mr. Haley.
“I’d say low-to-mid single digits” overall, Mr. Haley said.
“Exposure units and P/C pricing is rising,” Mr. Glaser added.
Mr. Duperreault also sees the upward move in pricing, he said.
“Certainly, in the commercial space, prices are going up,” almost across the board and in many regions, Mr. Duperreault said. “The rate environment we’re in is actually pretty good.”
“Right now, the surplus lines side is actually quite robust,” with rates and policy counts both up, he added.
Broker CEOs also talked about consolidation. Acrisure has been the most acquisitive broker in each of the past four years, according to Ms. Herman.
The firm has completed about 380 transactions, over the past 4 1/2 years, Mr. Williams said.
Mr. Glaser said that Marsh’s purchase of Jardine Lloyd Thompson Group PLC made Marsh stronger geographically in places like Australia, Hong Kong and Brazil, and offered growth “in terms of talent, capability and opportunity.”
The executives generally agreed that technology is friend, not foe.
Technology, Mr. Williams said, is both a disrupter and an enabler, but much more enabler than disrupter.
“When I look at insurtech, I think about fintech about 10 years ago,” Mr. Haley said. Instead of fundamentally changing the banking model, “what happened is that it basically made banks more efficient.”
“I think insurtech is more a support to us than a threat to us,” Mr. Duperreault said.
A survey by U.K.-based consultancy firm PricewaterhouseCoopers International Ltd. found that insurance company chief executives' three biggest concerns are over-regulation, cyber threats and speed of technological change, The Financial reported. More than 80% of CEOs are concerned about shortages of digital skills within their workforce and the industry.