PwC breakfast briefing: Emerging risks present an opportunity the broking industry must seize

Published at 08:30 AM on 15 September 2014

In his keynote speech today at the PwC breakfast briefing at the annual Monte Carlo Reinsurance Rendez-vous, Dan Glaser, president and CEO of Marsh & McLennan Companies, said that the reinsurance industry has the technological and intellectual capabilities that can bring real solutions to some of the world’s challenges, of which there is no shortage today.

In his keynote speech entitled “Fulfilling our purpose in the age of risk and uncertainty”, Glaser called on the industry to focus on broader and more strategic relationships with greater transparency, trust, and certainty; and that  clients, brokers, insurers and reinsurers should work together to develop products for emerging, less tangible, risks.

Glaser told the audience, which included CEOs and chairmen from the sector, that he was passionate about the industry and was proud to have given his entire career to it. Glaser suggested that innovative products offer better margin potential and longevity than traditional business areas where there is relentless price competition.

Dan Glaser, president and CEO of Marsh & McLennan Companies, said:

“I believe we are at an inflection point, and that the continued profitable growth of our industry is directly tied to the positive impact we make on the world. Why shouldn’t we apply our skills and collective brainpower to predict, quantify and help mitigate societal risks? The world will be a better place when we do, and the big picture will look less risky, with opportunities in much sharper focus.

“Competition in our industry should be based on what’s most important to the vast majority of our clients: breadth of products, contract certainty, claims performance, service, responsiveness, and yes, price.

“My advice is to think of emerging risk as an opportunity for all of us in the risk business to use our collective imagination as a preview of our industry’s upcoming innovative solutions.”

Glaser highlighted a number of emerging risks, notably, the growing threat of cyber attacks, water supply and food shortage crisis, shifting demographics and extreme weather events. Glaser advised that the speed at which these new risks are emerging, and the degree to which they are interconnected, is unprecedented.  He cautioned that the industry spends too much time and capital on CAT risk and that this ‘limiting’ focus on a narrow set of perils “is leaving reinsurance ripe for commoditisation.

Dan Glaser, president and CEO of Marsh & McLennan Companies, said:

“Will we become low-cost purveyors of commoditised capital or provide greater value to our clients and society through innovation? Will we continue to concentrate our industry’s considerable talents and capital on catastrophe risks, or will we, in addition to CAT risk transfer, find innovative ways to finance the emerging and big-picture risks that come with growth, transformation and global development?”

PwC has today launched a new report, ‘Broking 2020: Leading from the front in a new era of risk’ which reveals that risk buyers are demanding more from the industry in this new era of risk. The report suggests that the rapidly evolving risk landscape is a great opportunity for brokers to take on a wider risk partnership role in the market and help facilitate solutions for emerging risks.

David Law, global insurance leader at PwC, said:

“Rather than everyone chasing low margin business with little signs of rate rises on the horizon, the industry should be investing in developing solutions for the emerging set of risks – many of which remain underinsured.

“Our research shows that more than ever before, risk managers are looking for more consultative partners who have the necessary knowledge of their risk challenges and who can develop the solutions they can’t afford to create themselves. Brokers are in prime position to seize this opportunity. If they don't, others will.

“Given the potential for sharply rising losses and more complex loss drivers, the evolving risk environment can no longer be managed solely through traditional approaches. Brokers are ideally placed to identify and develop viable solutions to the changing risk environment – to truly be global risk facilitation leaders.”

Notes

  1. For more information, please contact Amy Tiernan, PwC media relations, [email protected] or +44(0)7852 941 236 or Missy DeAngelis, MMC, [email protected] or 1.917.937.3118
  2. For more information on PwC’s Broking 2020: Leading from the front in a new era of risk research please visit www.pwc.com/insurance/broking2020
  3. For more information about the Monte Carlo Reinsurance Rendez-vous please visit www.pwc.com/reinsurance

About PwC

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

2014 PricewaterhouseCoopers. All rights reserved.

About Marsh & McLennan Companies

MARSH & McLENNAN COMPANIES (NYSE: MMC) is a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and human capital. Marsh is a global leader in insurance broking and risk management; Guy Carpenter is a global leader in providing risk and reinsurance intermediary services; Mercer is a global leader in talent, health, retirement, and investment consulting; and Oliver Wyman is a global leader in management consulting. With annual revenue exceeding $12 billion, Marsh & McLennan Companies’ 55,000 colleagues worldwide provide analysis, advice, and transactional capabilities to clients in more than 130 countries. The Company prides itself on being a responsible corporate citizen and making a positive impact in the communities in which it operates. Visit www.mmc.comfor more information.


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PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

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