June 15th, 2017

Industry Must Bend the Risk Curve to Deliver Value, Says John Doyle; MMC Young Professionals’ Global Forum 2017

Posted at 8:44 AM ET

John Doyle, President of Marsh LLC, called upon delegates at the MMC Young Professionals’ Global Forum to take advantage of the multiple opportunities in the current environment which he called the “Age of the Client.”

The increasingly dynamic insurance arena, with the emergence of autonomous vehicles, new cyber risks and a constantly evolving terrorist threat, creates an opportunity for insurance professionals to bend the risk curve and deliver a more compelling client experience. Mr. Doyle said: “Emerging risks are going to come at us faster than ever. New types of risk will drive demand for insight and innovation and will challenge all of us to deliver better solutions for clients than we have and more rapidly.”

In this rapidly changing environment, he said advisory services will remain critical to the insurance offering. “The good news is that we will still matter, particularly in the middle market and for large multinationals where they will look for our insights - not just products or risk transfer.”

However, Mr. Doyle added that client-facing tech will become an ever more important part. “We are going to see more digitally driven transactions in the commercial market. The client experience will be enhanced by digital tools.”

He anticipates that distribution in the middle market will “continue to consolidate,” while noting the continuing impact of investor capital. For Marsh, he said: “We see the opportunity to deliver better value to clients - that’s what’s driving our efforts. We see the opportunity to bring scale to the middle market.”

On increasing underwriting automation and the impact of human judgement, Mr. Doyle said: “Companies are looking at tightening up those judgements by using automation, machine learning and behavioral algorithms to really change how the underwriting process happens.”

Blurring of the lines between traditional brokers and insurers is inevitable, he said, “largely driven by the influx of alternative capital. Traditional partners will compete with one another.” He continued: “We’ll see traditional insurers and intermediaries looking to use alternative capital to take out steps in the value chain.”

Turning to what will change the industry, he focused on three specific areas: data, distribution and capital.

Highlighting the colossal increase in data and data sources in recent years, he said: “Think about the possibility that this data creates to enable us to assess risk differently.”

Online solutions and new start-ups are driving marked change in the distribution process, he stated. Using the example of Lemonade, he said: “What is unique is the digital delivery process they use and the instantaneous nature of what they do.”

“Blockchain provides the ability to drive speed, accuracy and security into the insurance process,” Mr. Doyle added. “What a great opportunity we have to use some of this technology to deliver a better, more secure, faster and cheaper process for our clients.”

Addressing concerns about capacity in the market, he noted that of the USD 1 trillion earmarked by the USD 35 trillion-strong pension fund sector for the property cat reinsurance arena, only USD 74 billion had actually been allocated. “What are the possibilities for the rest of that USD 1 trillion?” he asked.

“And should we just be limiting our thinking to property cat? As we build new models and understand risk better than we have before, what are the possibilities for these investors to get closer to the risk?”

He highlighted Alternus, a new property facility announced by Marsh at RIMS which it developed in conjunction with Allianz and (re)insurance investment manager, Nephila. “We developed the first ever retail insurance facility using alternative capital,” and only 60 days in, he added, “the take-up rate has been fantastic.”

“We are in what experts refer to as the ‘Age of the Client’” he continued, “driven by emerging technologies and the greater customization clients enjoy. But I would argue that our clients are equally being challenged by the disruption these new capabilities create. So, are we in fact entering an Age of Risk or Disruption?”

“As I look forward and think about what these innovations mean for our clients,” he stated, “I see huge opportunity for all of us. Value for the client will ultimately be connected to our ability to bend the risk curve.”

Looking back at the last 30 years, he said that the industry has focused on how to drive greater efficiency into the insurance process, but not enough on “bending the risk curve.” “How do we drive value to the client? How do we change the outcome for the client?” He continued: “We have so many opportunities to change the conversation with the client and to deliver far greater value.”

In his concluding comments, Mr. Doyle described the attributes of “a winner” in this new environment. “The winners will be client advisors with data and insights to deliver solutions to clients,” he said. “They will be distributors that offer a compelling client experience. They will be capital providers who bring greater efficiency to the value chain.”

“These are the characteristics of those who will win over the medium- and even the long-term.”

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John Doyle, President of Marsh LLC, addressing delegates at the MMC Young Professionals’ Global Forum

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