The global re/insurance industry can play a major role in the mitigation of future pandemics but it will require government partnerships to be successful.
Executive Vice Chairman and Chief Operating Officer of Chubb Group, John Keogh, said while the market had an opportunity it needed to work with governments to support smaller firms.
He was speaking to Aon’s President Eric Andersen as part of the broker’s fireside chat series.
Mr Keogh said that the novel coronavirus (COVID-19) pandemic is giving the re/insurance industry a ‘huge shove’ forward in the trend towards digitization, which would help improve interactions with clients.
“I think the understanding of the customer experience and the demand from people to communicate digitally with their insurance provider is going to accelerate,” he said. “And it’s going to force all of us to do a whole lot more in terms of advancing our strategies, advancing our investment, and advancing our technology to be more digital and provide our customers with a much better online experience than they would get otherwise, because of the pandemic.”
Mr. Keogh added that COVID-19 had presented the industry with an opportunity to play a “more vital role” in future pandemic events.
“I think there’s a need for this industry to step up and provide ideas, provide thoughts, provide solutions so that it can play a more important part in helping companies affected by a global pandemic,” he said. “Taking the position that we can’t insure it at all, and there’s no place for the insurance industry to play a more important role when and if this happens again is a mistake. We should all come together so that the minds of this industry can focus on how we can positively help in the future,” adding that effective leadership in both the public and private sector was key to progress.
Mr. Keogh also discussed Chubb’s proposal for the future of pandemic cover. “We’ve tried to put forward something that we think balances [public and private sector involvement]. And we’ve tried to distinguish the needs of the small commercial insured from the larger, perhaps more financially-capable insured.”
Mr. Keogh explained that if governments were able to provide premium subsidies to smaller commercial accounts, it would make pandemic insurance affordable to all businesses; larger accounts would not require such subsidies due to re/insurers’ ability to better actuarially price the exposures.
“When you move to larger accounts, the ability to price becomes better over time – the ability to model for return periods relative to the pandemic allows for actuarially sound pricing. Our pandemic proposal charges actuarially sound rates for larger companies because they have the ability to pay given their financial size and strength relative to small commercial businesses,” he said, adding that Chubb’s aim was to try to initiate discussions in this area.
“We’re not trying to say that Chubb somehow has all the answers around what should be a proposal that ultimately becomes law. We’re trying to just be constructive and put some ideas forward for others, and hopefully encourage and stimulate a dialogue that leads to a solution that’s better than the solution we’re providing right now for COVID-19.”
Mr. Keogh urged the industry to keep innovating and investing in technology, as the investment would ultimately allow cost savings to be passed to customers. However, he added that innovation was not always about new products and services.
“It’s about the way we do our business and being able to break-out the inefficiency – getting the quality better, more standardized, so that you can actually drive efficiency.”