The AAIS Pulse newsmagazine recently featured Robert Hartwig, Ph.D., CPCU, industry expert and insurance professor at University of South Carolina's Moore School of Business. He spoke with AAIS CEO Ed Kelly on a range of topics facing the industry including COVID-19, climate change, cyber risk, year-end financials, and much more.
Mr. Hartwig and Mr. Kelly began their conversation reflecting on COVID-19, its continuing impact and lessons learned from it. Mr. Hartwig notes that “…the property and casualty insurance industry made it through COVID…relatively unscathed here in the United States in terms of what the original loss expectations….”
They continued discussing the impact of climate change on the industry and how an increase in catastrophes is forcing underwriters to rethink pricing.
Considering the use of data in underwriting, Mr. Hartwig said there’s good news and bad news. The good news is there is more data than ever; the bad news – there’s more data than ever. This problem is sifting through and ensuring the use of better, timelier data. He sees the need to be able to process data will be built into new and/or disruptive technologies introduced into the industry in the coming years. With so much data becoming available, Mr. Hartwig sees more cyber risk emerging and a growing need for cyber insurance.
Mr. Hartwig then turned his attention to litigation and the longstanding battle for tort reform. Mr. Hartwig also mentioned that legislation and regulation could have an impact on financial results, as much as market volatility and rising interest rates, which are stoking inflation concerns. He remains optimistic about industry financials as most sectors hit hard by the pandemic have recovered – or will soon – including inland marine, workers compensation, and personal auto.
As a university professor, Mr. Hartwig identifies the continuing talent gap as a major concern that needs to be addressed for the industry to grow. He sees students coming out of college with a broad skillset – not just underwriting or pricing – but data and analytics and other transferrable skills. It leads to opportunities in banking, technology, and other areas. With the competition for talent as fierce as ever, P&C companies must do a better job of actively engaging with college students on-campus earlier in their career.
Mr. Kelly and Mr. Hartwig closed their discussion talking about potential growth. Mr. Hartwig said that coverage for brick and mortar risk will continue to be a focus – especially with climate change posing an increasing threat. He also sees lots of opportunity in the rapidly expanding global environment, as well as areas like cyber lines. As for company health, he says ESG (Environmental Social Governance) will become a greater factor in company success and regulators will continue to monitor these ESG factors to assess the industry.