Reducing Fear of the Future

Fear is a basic human emotion that we all have, fed by our instinct for safety. Yet, while fear can be paralyzing, there is perhaps no industry more tailored to helping to alleviate fear than the insurance industry.

The power to reduce fear of the future ? in a business context ? means giving companies the security they need to invest and grow, trade, sell, and create jobs. For centuries, we’ve been partners with merchants, industrialists, and entrepreneurs, providing oxygen to the economy and fuelling globalization. In that sense we enable the future. 

Today, rapidly advancing technology, the explosion of data, and economic trends are changing our lives in fundamental ways. Insurers are exploring new models for growth and innovation and ways to deliver more value in this new environment.

I believe that insurance will continue to play the role it has always played – reducing fear and enabling the future – but only by partnering with clients, collaborating and encouraging diversity of thought, investing in innovation and science, and using data to help clients achieve better outcomes. Insurance is important to society as a critical lubricant for commerce and for security and optimism in daily life, and that’s why we need to ensure that as an industry we stay relevant.

Enabling the future

Our company has a 97-year heritage of pioneering new markets, new products, and insuring what others deemed impossible. AIG’s DNA is resilience, adaptability, and innovation. Many predicted our demise in 2008, but we survived and paid back our debts with interest.

We are still adapting – and I’m truly excited about the changes we are making so that we will be an insurer that enables the future.

We are doing this by putting the client, as our partner, at the center of everything we do. We are open to new kinds of collaboration and diverse views, listening, learning, and partnering with experts who can help us find better solutions for our clients. We are investing in science and technology, and using our data and our experience to go beyond insurance as risk transfer ?  we’re providing risk management expertise that keeps people safer while reducing, or even preventing, losses in the first place.

New capabilities empowering traditional skills

Obviously, relationships remain fundamental to our business. Clients rely on distribution and underwriting professionals, who understand their complex risks, and claims adjusters with local knowledge to compassionately and expertly manage their claims in times of need.   

But increasingly, in a world where major global clients cite disruptive technology and cyber attacks as top concerns, successfully managing risk means a greater application of science and data analytics. 

Exploiting new tools such as Artificial Intelligence and Natural Language Processing in combination with our vast data resources is helping us become better business enablers, partnering with our clients to take more informed risks: 

• With AIG’s Client Centric Analytics service, we can pinpoint loss drivers and improve safety. This team isolates the signal through the noise of big data. For one hotel client we recommended the redesign of room layouts to reduce claims; for a logistics company, we helped them make smarter fleet purchasing decisions.
• In a 17-week pilot with Europcar - Ireland, gamification of telematics data reduced the volume of claims by 23%.
• With our investment in Human Condition Safety, we can help keep people safe on construction sites with wearables, and also use this technology to learn more about risks. 
• As one of the first insurers approved to operate drones for risk assessment, AIG is using unmanned aircraft to manage risks and assess claims faster, more safely, and more accurately.

Investing in innovation, science, and data analytics

While we embrace new technology and the opportunities it brings, we know that in order to master it, we need to expand our skills base as a company. So, as we continue to reduce expenses, we also continue to invest in new capabilities. Currently, we invest $700 million a year in innovative products and interesting growth areas, as well as in developing new skills in the workforce. AIG now has more than 600 engineers and 150 scientists using data science and analytics to complement the more traditional, and still indispensable, insurance skills such as underwriting. For employees and potential recruits, this means that career and development opportunities within AIG are diversifying.

Nurturing collaboration, diversity of thought, and actively seeking partners

I’ve long believed that people only reach the best ideas by collaborating with others who have diverse backgrounds and skills. Consequently, we have been building a culture of collaboration and diversity at AIG so that we continue becoming an insurer of the future.

By extension, that principle also means actively seeking partners who can add value in the search for better risk management solutions for clients. 

• We’re excited about a joint venture we just announced with Hamilton Insurance Group and affiliates of Two Sigma Investments that will use predictive analytics and technology for a platform to serve the SME market more effectively. We’re optimistic that this technology can revolutionize the market and deliver a more tailored and compelling value proposition for clients in this critical segment. We will also collaborate in developing specialized asset allocation solutions for the unique characteristics of insurance investment portfolios.
• Our partnership with universities helps us stay in the forefront of the latest research:
  • We’ve partnered with Clemson University, using their engineering capabilities and virtual reality simulators to enhance loss prevention training.
  • In working with Johns Hopkins Bloomberg School of Public Health, we developed a workers’ compensation claims program that improves client outcomes because these clinical experts tell us what the most critical and costly injuries are, at each stage of the claim.
  • With New York University, we are using science and big data to study near-misses at intersections. The collaborative effort seeks to dramatically decrease the amount of time it takes for an intersection to be declared unsafe, and thus changed, from years, to several months.

These are all examples of the open mindset and collaborative approach, which I see as key to our industry’s ability to navigate a disruptive world.

Standing the test of time

We can’t possibly know what fears will exist in 10, 20, or 100 years from now. However, if the industry continues to transform itself ? by partnering with clients, by collaborating and encouraging diversity of thought, by innovating and using science and data more effectively – I’m confident the role of insurance in mitigating fear and enabling the future will stand the test of time. 

This article first appeared in CEO Risk Forum 2016, published by Reactions magazine.