As the world becomes increasingly precarious, new risks have either not been addressed or have been by the industry's refusal to accept the risk, said insurance industry legend Patrick G. Ryan.
“We haven't been as responsive as we need to be,” the chairman and chief executive of Ryan Specialty Group said at Advisen's Management Liability Insights Conference in New York.
However, through innovation and a better spread of these newer risks—cyber and contingent liabilities as examples—Ryan says the surplus lines sector is in line for expansion.
“With every adversity is the seed to equal or greater opportunity if you search for it and figure out ways to solve it,” he said.
Patrick Ryan was one of NU's Living Legends of Insurance. Read the story here.
Ryan's rallying cry to the industry had much to do with his perception that it has yet to find ways to “solve the needs not being solved.”
The percentage of the gross domestic product (GDP) spent on insurance is declining, he said. Right now large companies with high risk can't get insurance and are taking on the risk themselves. “We can address that,” he said. “There is opportunity. These are not esoteric risks.”
“The future of this business is going to the innovators,” he continued.
The founder of insurance brokerage Aon would not accept cost or the soft market as barriers to innovation. When asked what he would tell companies that believe the opposite, he said, “You're looking at it wrong. Product development can be pretty inexpensive. What's expensive is not to innovate.”
“You've got to invest [in innovation] or you're not going to grow,” he added. “I never believed you can't grow in a soft market.”
Innovation “best comes from the distribution side—the people touching the client,” he said. That aspect of insurance is also changing, he added.
Retail brokers have decided to do business with far fewer wholesalers and, in the meantime, wholesalers have gotten larger. Ryan says he does not think the largest of the wholesalers will get larger, but he does anticipate merger and acquisition activity at the regional and local wholesale level.
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