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Emerging and Evolving Risks

Identifying and understanding the world’s emerging and evolving risks and their impact to society and our customers is at the center of all that we do.

Helping the insurance industry navigate a challenging future
Jul 18, 2022

At Reuters ‘Future of Insurance’ conference, Zurich leaders address different but equally daunting risks facing insurance companies and their customers.

Neeren Chauhan (far left) of Zurich North America participates in the panel discussion, “Strategize, Adapt, Innovate," at the recent "Future of Insurance" conference. Joining him were Lisa Davis of Canopius (from left), Prakash Chava of LTI, and Bill Martin of Plymouth Rock Assurance.

Insurance companies are committed to helping their customers manage risk, but who’s helping the industry navigate its own disruptive landscape? “Future-proofing” insurance in the face of global change was the focus of “The Future of Insurance USA 2022,” a Reuters Events conference to help insurers succeed in the coming years and decades.

Two speakers from Zurich Insurance were among the presenters. More than 400 attendees representing over 70% of insurance carriers attended the event held June 14 and 15 at McCormick Place in Chicago.

“Insurance leaders have to be bold” to succeed, said Neeren Chauhan, Head of Strategy, Innovation and Business Development at Zurich North America, in his opening remarks for “Strategize, Adapt, Innovate,” a panel discussion that closed the two-day event.

For Chauhan, boldness means embracing a broader perspective of the marketplace to usher in truly innovative processes.

“External orientation is a core ingredient for innovation,” he said. “We’ve got to open the doors and windows a bit more to see what is happening outside of insurance. There is a lot of inspiration there. It is not only technology. What about retail banking, or what’s happening in retail in general? The aspiration is there [and] … we create broader themes, but then we go back to our silos and the decisions get made in the silos.”

Sierra Signorelli, CEO of Commercial Insurance for Zurich Insurance Group, addressed the impact of climate change as well as environmental, social and governance (ESG) principles and how the insurance industry can take a leadership role. She advocated for actions insurers need to take not only for customers but also on behalf of the larger community.

“From a climate perspective, we all need to take steps to ultimately decrease our exposure to catastrophic conditions,” Signorelli said during her June 15 keynote fireside chat, “ESG: Why Insurance Must Play a Key Role in the Transition to a Low-Carbon Environment & Create Sustainable Value in Society.”

Sierra Signorelli (right), CEO of Commercial Insurance for Zurich Insurance Group, discusses climate risks with moderator Andrew Daniels of InsurTech Ohio.

“Just improving resilience at our customers’ individual facilities is not going to be enough. Even if you have a business that is resilient, if the surrounding community is not prepared for an event, you have road closures, you might have power outages, or the employees who work at those facilities can’t get to work because their homes are damaged — so it’s important that we engage with communities so we can improve their resilience.”

Though Chauhan’s and Signorelli’s talking points differed in content, both addressed the overriding mission of the conference. “The insurance industry is in the midst of a significant transformation that will reshape the reality of strategic planning,” the Reuters organizers noted in their program commentary, and that transformation includes growing digitalization and the rise of insurtechs, but also the risks of climate change and other considerations related to environmental, social and governance trends, and a tight labor market.

Neeren Chauhan: The people problem amid digital disruptions

Chauhan’s panel provided an open forum for the four participants: Chauhan; Prakash Chava of LTI insurance technology consulting services; Lisa Davis, CEO of Canopius; and Bill Martin, President & CEO, Plymouth Rock Assurance — to explore how insurers can best navigate the transformational changes facing the insurance sector.

Each presenter expressed optimism about insurance’s technology-driven future and the ever-increasing access to useful data, but interestingly, the theme of digital advances frequently segued to the topic of people — specifically, why it’s imperative that the insurance industry work harder to attract top talent.

Chauhan returned to the theme of his opening remarks. “We’ve got to be bold,” he told the audience. “We’ve got to give people purpose. That purpose cannot be rooted in just ‘some projects.’ What challenges can you give them?” He added, this involves “how we structure the organization, how decisions get made, [providing] the ability and the permission to take risks, and the rewards if your risk succeeds. Giving people permission to take risks is important.”

Martin agreed, but added that the industry needs to better communicate how insurance already provides an effective platform for young people who want to make a meaningful impact in the world. “Insurance touches just about every part of society, including climate change, including deciding what resiliency is,” he said.

“As an industry, we tend to pigeonhole people in one role,” Davis said. “In order to attract that A-plus talent, we’ve got to open people’s minds.”

Chava said he felt the “coolness quotient” for insurance careers was rising but added that insurance employees, not just the human resources department or industry leadership, need to start communicating that message.

Chauhan said that established firms can take a cue from insurtechs and their success in attracting investments. “The talent is following that investment. I think it’s a great sign.” The challenge, he added, is being willing to let people pursue innovations that may not succeed right away. “Maybe the idea might fade but the people will stay, because they’re trying to solve problems.”

Asked to share what excited him most about the future, Chauhan addressed not data, but an issue rooted in human behavior: The importance of inviting collaboration, particularly as it applies to insurtechs.

“The conversation in my mind is not about [insurtechs] taking our share of the pie,” Chauhan told the audience, but rather, “How do we collaborate? In the whole ecosystem between carriers, intermediaries, reinsurers and insurtechs, there will be a lot more clarification around what we compete on and where we collaborate. Hopefully, we’ll be able to weed out a lot of systemic inefficiency, where everyone is duplicating and trying to do the same thing. There’s a lot of overlap. So, I’m excited about that. The technology is achievable and accessible to make that possible. And the customers will demand that change.”

Sierra Signorelli: Climate change and the role of insurance

In three sessions over two days, Signorelli advocated for the impact the insurance industry can make to help mitigate the impacts of climate change.

In addition to the aforementioned presentation, Signorelli also participated in a panel discussion, “What Does ESG Mean for Insurance?” and a question-and-answer session, “Responding to a Changing World.”

“From a climate perspective, we all need to take steps to ultimately decrease our exposure to catastrophic conditions,” Signorelli said. “But in the meantime, you see impacts from a climate change perspective, and any insurer that has a large Property portfolio is probably dealing with this.”

She pointed to the large natural catastrophe (NatCat) events in 2021. “If we look back over the last four out of five years, we saw an increase in the severity of the events,” she said. “And, of course, within that window there’s an increased frequency. We also see that the claims and losses are becoming larger, we see the storm seasons are becoming longer, and we see the geographic spread of these events become broader. So overall, we just see the potential for far greater impact.”

Insurers can employ the wealth of data used to model the risk landscape to help businesses around the world manage climate exposure, she said. “At Zurich, we have a very large Risk Engineering team that looks at natural hazards to help build resiliency at individual locations to protect against some of these events.”

“It’s incredibly important that we engage and work with customers and businesses to improve resiliency,” she added. “When we look at claims at facilities that have taken steps to improve resiliency, they’ve gotten back to business faster and (were) less impacted from these events.”

Climate change presents many new and unpredictable risks for businesses, some directly affected more than others. When the insurance industry uses its influence to drive adaptation and better choices, Signorelli emphasized it’s in their best interest to choose engagement over exclusion.

“We engage on a range of topics,” she said. “One is by helping businesses understand what their exposures are for their facilities and then helping them build resiliency. We also work with them when it comes to understanding and building redundancy in their supply chain. Supply chain has become an increasingly important topic and we even see those that are critical suppliers looking to build greater resiliency to flooding and storm events as they understand how they might be impacted by various weather events. And then using this as a competitive advantage.”

“We also engage with customers on various ESG topics, and we have conversations with them,” she added. Specifically, she said that Zurich prioritized conversations with carbon-intense customers — “not to be punitive but just to understand that it’s more likely that those who are carbon-intense are going to have the biggest transformation in their business. We want to understand how their business is going to transform, and in understanding that, we can better prepare with different products, different services, make sure that we have the right expertise to understand these evolving risks.”

“We’ve been pleasantly surprised as we’ve gone through these conversations,” she said. “Many of these customers are completely transforming their business for the coming years. While they might not have all the answers at this point, they are certainly fascinating companies to engage with and to learn from. It’s so critical to engage, because most companies are looking for the answers and we have the opportunity to help support their transition.”