How 21st century exposures shape insurance innovation

Authored by AIG Head of Financial Lines Jason Kelly (pictured)

Changes in technology, regulations and society are quickly shifting the global risk landscape, which directly impacts and informs Financial Lines coverage needs. To meet these challenges, AIG develops insurance solutions to help brokers and clients manage emerging and evolving risks.

“Complacency does not have a place in the insurance industry,” says Jason Kelly, Head of AIG’s International Financial Lines, which helps organizations manage the risk of doing business across borders, including professional and public management liabilities. “At AIG, we want to be strategic partners with our clients to help tailor solutions to meet their specific needs.”

AIG evaluates new 21st century exposures by analyzing trends and tapping into its long-standing presence in the insurance marketplace and extensive claims experience. When needed, the organization also consults with experts outside the insurance industry, such as software, artificial intelligence or robotics specialists to deepen AIG’s understanding of emerging technologies likely to reshape risk.

Listening to clients is also key: Cyber exposure has become a major concern, given the proliferation of remote work and digitization of business operations. In addition to mitigating risk and managing claims, AIG provides expertise to help brokers and clients look ahead to potential future needs. How insurance programs get structured is constantly evolving to be relevant to today’s ever-changing scenarios.

“Open dialogues lead to better understanding of risks and build trust,” Jason says. “It helps us develop the right solution, whether it’s a multinational program, captive solution, or product suite.”

How Environmental, Social & Governance (ESG) concerns affect financial lines underwriting

Technology isn’t the only factor affecting the insurance landscape.

With many companies today setting ESG goals to address broader social issues, such as climate change and gender pay equity, AIG is helping brokers and clients think through potential risks, in addition to pursuing its own ESG initiatives.

For example, AIG International Financial Lines has a dedicated team committed to product development within the ESG space, primarily focused on directors and officers (D&O) and professional indemnity (PI) coverage. AIG analyzes potential exposures, such as litigation risk, to develop insurance programs that are aligned with clients’ ESG goals and issues important to broader stakeholders.

“It’s important that brokers and clients feel comfortable they’re getting the coverage they need in alignment with their ESG goals,” Jason says. “At AIG, we take these factors into consideration when developing insurance programs.”

Within the ESG space, Jason adds, liability can also shift. For example, an environmental issue may have potentially higher risk in the short term than a social issue. AIG monitors these trends to help clients identify exposures and update their coverage as needed.

“ESG matters are evolving quickly,” Jason remarks. “We keep abreast of issues to better advise brokers and clients of potential issues they may face.”

As global insurance markets develop, so does the need for solutions

Global legal and regulatory trends may also impact clients’ insurance needs. To help identify and mitigate potential exposures, AIG proactively monitors new regulations, laws, and litigation practices worldwide. Some may require innovative product solutions, often with a short turnaround.

A rise in discrimination or harassment claims in a geographic region, for example, may lead to new regulations or laws, and further increase litigation in employment practices liability. In instances like these, AIG can evaluate potential coverage gaps and develop product solutions.

“We’re committed to the markets where we choose to operate, and we develop long-term partnerships with our brokers and clients,” Jason remarked.

If the available product suite in that geographic area lacks the coverage needed, Jason notes, AIG can build on its product and claims experience from other geographies to find solutions. In many cases, effective products from other regions can be adapted and made suitable for the market based on local regulations and client needs. This expertise allows AIG to offer new products in a timely, efficient manner.

“The insurance industry has such a dynamic landscape – it changes all the time,” Jason says. “In my 22-year career at AIG, I’ve never repeated the same day twice. But hearing brokers’ and clients’ stories about how we helped them makes it all worthwhile.”