“Clearly, we are in unprecedented times and a period of heightened risk. We’ve prolonged inflation, we’ve high-interest rates, we’ve geopolitical tensions, and we’ve climate risks that exacerbate the risk for businesses and the communities in which we operate.”
In his keynote address at the 2023 Insurance Innovators Summit, RSA CEO Ken Norgrove (pictured) did not shrink away from pinpointing the myriad of risks facing the industry as he discussed ‘reimagining insurance in unprecedented times’. Alongside challenging economic, geopolitical and environmental considerations, he noted that technological advancements – including the rapid evolution of generative AI – and increasing social unrest are rounding out a global risk landscape that is both “interesting and scary”.
“All these risks impact the continuity of business, the resilience of our customers, and the resilience of the economies and communities in which we operate,” Norgrove said. “It is our role as an industry to understand these risks; evolve with them, emerge with them and provide adequate methods to communities and businesses to transfer risk, build their own resilience and move forward in the risk environment that we face into.
“So where are we placed as an insurance industry? Well, we have a long history of tackling uncertainty. Whether you go back 100 years to the Industrial Revolution, or to the world wars that we faced into, we have a strong track record of that evolution. And we must continue that evolution with the changing risk landscape.”
Norgrove highlighted that elevated risks are not new to the insurance industry and that, historically, the sector has developed propositions to meet those changing needs. In addition, insurance has developed complex models, underwriting expertise and strong relationships, all underpinned by a changing data landscape. As the risk accelerates, he said, insurance should not shy away from finding new solutions, whether through public-private partnerships, collaboration, alternative risk transfer methods or new products.
“As an industry, we need to be able to evaluate what the risks are for the future, how we tackle those risks, and how we support our customers into the future,” he said. “This can be through looking at our own product sets and propositions, ensuring that they're fit for purpose today and in the future, and ensuring that they meet the needs of customers and develop ways to build resilience against these new risks.
“I think our industry is great at doing that. The future won't be the same as it has been. Investment in innovation and growth is increasing. Technologies and climate tech will proliferate. As an industry, we are in the best place to understand these risks, evaluate them, mitigate them and transfer them. Our clients will be using new technologies themselves and closer collaboration with those clients around the individual challenges is key.”
In addition, he said, the industry must ensure that the skill sets of its people are fit for the future they’re facing. This will mean changing up business structures to capitalise on innovation, and equipping employees with the right skills, while ensuring that the technology, insight and data used by the industry give insurance businesses the advantages they need to be able to help customers with a changing environment.
Identifying how insurance businesses can support clients facing this uncertain landscape, Norgrove emphasised the need to track leading indicators in order to better predict the economy’s direction, allowing clients to invest their resources in the areas that will generate the greatest return. This is not just their insurance and risk transfer resources, he said, but their resources as a business.
To better understand these leading indicators, companies need better insight and understanding into how the world is changing, which requires more advanced data and modelling and the use of newer technologies. There’s a huge amount of data available, he said, and having the skills to interpret the right data and take appropriate action is what will tell the difference between success and failure.
This isn’t just about macro data sources, Norgrove said, and RSA is consistently innovating to develop data to better understand the risks facing individual clients and the day-to-day running of their businesses – to help control these risks and put risk mitigation measures in place. Also critical to supporting clients is going back to basics, and underscoring the value of having meaningful conversations with brokers and clients.
“We need to deepen those relationships to ensure we have the understanding they have, and to provide the protection and products that they need to face these risks,” he said. “There was one innovation called the telephone, which we tend to use less and less! And I think those important conversations with customers tend to be hidden behind a whole load of processes and technology.
“And I think one of our roles is to put technology in a place that enables more conversations, and more relationships with customers and businesses. Long term partnerships with those brokers and customers on the individual challenges that companies face will help build resistance, whether through sharing knowledge or understanding who’s best placed to tackle the emerging risks of the future.”
Norgrove noted that by helping clients to better identify and anticipate emerging trends, forecasting can allow the industry to better understand emerging risks, which will enable it to manage, capitalise and build resilience. The industry was caught a bit flat-footed by the pandemic, despite it being a known risk, he said, and it needs to work to ensure that when the next ‘Black Swan’ event happens, it’s best placed to know how to respond clearly and support the communities it operates in.
“At RSA, as part of the Intact group, we track 1000s of external variables, and use technology and expertise to leverage that data into actionable insights that can allow us to better understand the risks facing our customers and identify opportunities in our portfolio,” he said. “The role of our industry is to evolve alongside the communities to make sure that we identify the risks and listen to our customers… But we must also advise them on what risks we identify, support them in managing those risks and develop business continuity and resilience.”
Echoing the sentiment of We Fox’s Laura Eschricht earlier in the conference, Norgrove underlined his conviction that, “if we think insurance is just about capacity, insurers will not be an important part of the food chain of the future.”
“Insurance definitely is not just about providing dumb capacity,” he said, “but it's providing a facility to develop strong business and societal outcomes. And if we remain focused on those, for me, that will be the longevity that insurers will face in this broader industry, which is now not just an insurance industry, but a technology industry and a supply chain industry and a logistics industry.”
