Brokers from the Honan Insurance Group recently returned from the 66th Worldwide Broker Network (WBN) Global Conference in San Francisco. The US headquartered WBN is the largest independent broker network in the world with members in more than 100 countries.
Insurance Business’s eyes and ears at the conference, Steve Pappas (pictured above), shared insights from the conference floor. IB started by asking the Honan head of global and networks if Australia is far behind the US in terms of insurance industry innovations?
“The USA is ahead of the curve when it comes to insurance given the nature and size of the industry over there, but no Australia isn’t too far behind,” said Pappas.
Pappas suggested that the global nature of the insurance industry ensures its stakeholders around the world tend to keep abreast of developments. For example, a cyber vulnerability, he said, is a global issue.
One focus of the conference, he said, was the growing cyber risk. Delegates and speakers agreed that constant communication with clients about market leading internal cyber controls and procedures is essential. Pappas also said a conversation needs to happen well before the renewal about what the insurers are looking for in terms of the exposures that they are prepared to underwrite.
“If the insured doesn’t have the right controls in place at renewal the insurer will drop capacity or even come off risk which will lead to hard conversations with the client,” he said.
Pappas said speakers at the conference suggested that big shakeups are coming for the insurance industry in the next five years, especially in the area of artificial intelligence (AI).
“In the short term the major AI-enhanced changes will come on the underwriting side, essentially insurers will have the ability to assess risk before they even see a submission which will also help remove human error,” he said.
Papas said that in the near future, insurers could be approaching brokers with pricing on new businesses before they even receive a submission.
Another global industry issue is ESG (environmental, social and governance). In recent months, ESG has become more of an issue for insurance companies in terms of both how they invest and run their companies. Pappas said, from what he heard at the conference, the insurance industries in Australia and the US are adopting a similar approach to ESG.
“They [ESG factors] are playing a big part in underwriting as it relates to the sustainability of the company and how it can adapt in changing environments. There is pressure now on underwriters to identify and uncover potential ESG issues when analysing a company’s risk,” he said.
Following the conference, the WBN published an insights article about the ESG issue.
“As ESG investment products and services evolve rapidly, the creation of consistent metrics and taxonomies will make it easier to refine ESG strategies,” said the article: ESG investment strategies don’t just tackle the climate crisis – they make good business sense.
The article said the key for corporations and investors disclosing and assessing ESG risks is the quality of the data.
“They can be based on the 2017 recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), which now effectively form a global standard for disclosures and transparency on ESG performance,” said the WBN article.
The article concluded by warning that businesses and institutional investors that fail to respond quickly to ESG “may suffer significant financial and reputational damage.”
Supply chains – another topic addressed at the conference – have struggled since the onset of COVID-19 with many of the world’s major ports and factories locked down for months. Even as the pandemic recedes, supply line issues and transport costs are still very challenging for many companies. Pappas said the feeling from the conference was that the supply chain situation will return to normal.
“Yes, things will return to normal, they always do, but I don’t think it will be anytime soon,” he said.
Pappas said companies importing parts need to plan ahead many months.
“Clients that are importing parts for their products, or items such as building materials need to have a tight understanding of what those raw materials costs could look like in 12-24-36 months,” he said.
The WBN Global Conference was held in San Francisco in April and was the organisation’s first ever hybrid event. WBN holds two global conferences and many regional meetings each year.
