Published: November 2016

Blockchain Reaction

A Global Conversation About Blockchain: Insurance professionals talk to A.M. BestTV about the distributed ledger system that could streamline processes throughout the industry.

Analyze This: An analytical arms race is disrupting the traditional insurance company business model and changing the imperatives for success. Predictive modeling is steadily expanding, reaching beyond merely being a tool for product strategy to becoming an integral function within a new data and analytics-based business model.

Blockchain Reaction: Steve Monaghan jokes that he was in the cloud long before it was fashionable. The head of AIA Group Ltd.'s technology innovation group, Monaghan started his career as a commercial pilot. The transition from flying to financial technology may seem like a leap, but to him it makes perfect sense.

Built to Last: When Hurricane Ike came barreling through the Bolivar Peninsula in Galveston, Texas, eight years ago, more than 270 homes were destroyed. Ten were not.

Critical Juncture: Former U.S. Transportation Secretary Ray LaHood once said: "America is one big pothole." But the thousands of depressions jarring the nation's roadways are just part of the problem.

Expanding into Life: Long known as a captive domicile and a major catastrophe reinsurance center, Bermuda is emerging as a home for large life organizations, many of them formed as reinsurers to help insurers meet capital requirements.

Insight: A Lesson in Cyber: Insurance coverage for cyber liability is generating both dollars and questions. Surprisingly, the best guide to the questions can be found with the help of the acai berry.

Insight: Choosing Managers: As insurers increasingly outsource their asset management, the question of how they choose investment managers takes on greater importance. This process is of particular interest to third-party investment managers looking to retain relevance while increasing their own business.

Insight: Effectiveness In the Margins: In times of narrowing margins, the conventional wisdom suggests tighter belts and in some way squeezing lemonade from financial lemons. Both solutions offer a vision of old-fashioned austerity that may, at least initially, sound reassuring to investors and shareholders, even though past solutions often don't play well in the digital age.

Insight: Making the Move: With a more onerous regulatory environment, the increasing frequency and severity of natural and man-made catastrophic events, economic turmoil, market uncertainty and ever-present competition, there is no shortage of challenges facing insurance companies.

Insight: Vital Signs: Bricks and mortar, products and services, supply chains and cybersecurity--these are some of the things that corporate risk managers are duty-bound to protect. Equally as important are the employees who provide the knowledge, leadership and labor to fuel the economic engine.

Investigating Coverage: Recent investigations into energy companies such as Exxon Mobil over whether they misled investors about the business risks of climate change are raising concerns about potential liability as well as questions about whether there is coverage under directors and officers policies.

Issues & Answers: Insurance Technology: Industry professionals discuss technological solutions that can help insurance companies make strategic decisions, work more efficiently and increase revenue.

LOFT-y Ambitions: Ace Moghimi was studying for his MBA when he helped launch his first venture accelerator. With a background in investment banking and an interest in entrepreneurship, he was intrigued by the idea of corporate innovation.

Last Word: Delayed Reaction: There's a digital divide of sorts in the independent agency channel--only instead of the haves and have-nots, there are the haves and what-nows?

Partnering Up: American infrastructure is in dire straits. Public spending on aging assets--such as structurally deficient bridges, congested roads and deteriorating schools and waste treatment plants--has fallen to its lowest level since 1947, according to former U.S. Secretary Transportation Ray LaHood, and trillions of dollars in investment is needed to bring U.S. infrastructure up to snuff.

Point of Low Return: Blame it on a lackluster world economy, blame it on Brexit, blame it on the U.S. presidential election, but 2017 is threatening to be another year of low interest rates that has investment managers looking hard for better returns.

Smart Swaps: Fei Zhang needed help. As part of the Disruptive Technologies team at Allianz Group, Zhang oversees a blockchain lab in Munich. His mission is to explore use cases for the technology, implement proofs of concept and promote blockchain's adoption by the broader company.

Spotlights:

• Spotlight on Workers' Compensation: DOL Report Suggests More Federal Oversight of State Workers' Comp
• Spotlight on Commercial Lines: NAMIC's Collins: Access Economy Gives Edge to Mutual Insurers
• Spotlight on Specialty Lines: Chemical Safety Law Creates Exposures for Manufacturers

The Fintech Journey: Fintech in the insurance world has entered what we might call its "post-Next-Big-Thing" phase. That is, we've heard the bold claims from analysts about huge disruptions to come, and we've watched the staggering numbers rise--6,000 fintech and blockchain firms have received more than $64 billion in venture capital since 2010, according to CB Insights and Venture Scanner as of early March.

The Next Wave: An Industry of Choice: Ask your colleagues how they got their start in the insurance industry, and you'll typically hear: "It's kind of a funny story ..." or "I basically stumbled into it." You also might hear: "My dad was in the business."

The Tech Effect: After watching mass data transform auto insurance into a precise, number-centric line of business, the homeowners industry is following suit--and may even end up more sophisticated and technologically advanced.

U.S. Homeowners Multiple Peril: U.S. homeowners multiple peril — 2015 top writers ranked by 2015 direct premiums written.

What A.M. Best Says: A recent Best's Special Report highlights the challenges facing the global reinsurance industry.