Changing risk environment needs innovative solutions to manage emerging and evolving risks

The world is experiencing an era of unprecedented change: the increase in frequency and severity of storms; changing demands of customers; how and where we work; and the introduction and evolution of hybrid and electric vehicles and other technologies, among many others.

“Understanding the world’s risks and their impacts to society and to customers is more critical than ever,” said Vince Santivasi, EVP and Head of Direct Markets for Zurich North America. “The insurance industry needs to be able to identify emerging risks, sometimes even before customers are facing them.”

These were among the sentiments shared by Santivasi during his keynote presentation entitled, “When and Where Innovation Matters,” at Reuters’ The Future of Insurance USA 2023 event in Chicago in June. Santivasi oversees Zurich North America’s Direct Markets business, which is a leading provider of Property and Casualty (P&C) insurance and Finance & Insurance (F&I) solutions for auto dealers, offering a full suite of vehicle protection products for gas-combustion, hybrid and electric vehicles.

As part of Zurich Insurance Group, Zurich North America is one of the largest and most experienced providers of commercial insurance products and services in the U.S. and Canada. The company insures 90 percent of Fortune 500 companies, as well as hundreds of middle market firms in industries ranging from agriculture to technology.

“Our job is to help our customers meet the risk challenges of today and tomorrow,” Santivasi added. “The future of risk is always evolving, so we work to help build stronger, sustainable businesses for the road ahead.”

He talked about major risks facing businesses today, including cybersecurity, climate-related events and losses, questions over the use of artificial intelligence (AI) and challenges attracting and retaining talent. Santivasi also shared specific challenges to auto dealers — navigating a tightening regulatory environment in Washington, the changing demand of car buyers and the emergence of electric vehicles and autonomous vehicle technology as forecasts predict EVs will represent nearly half of all new cars sold in 2030.

Spurred by innovation, technological and digital advances are helping transform the insurance industry.

Technology-driven products and services, either to mitigate or transfer risk, continue to address the changing needs of the customer. “The future of the insurance industry — in order to survive — requires that we create collaborations and seek out new ideas,” Santivasi said.

To increase opportunity to collaborate with insurtech startups and disrupters, in 2018 Zurich created the Zurich Innovation Championship (ZIC), a global innovation contest. Startups compete for the opportunity to collaborate on solutions tailored to the needs of customers and the insurance industry. The competition fosters a new way of thinking and has allowed Zurich to get access to ideas and solutions from outside our own knowledge base.

A company called Dynamhex, a winner in 2022, now is providing carbon advisory services through a collaboration with Zurich Resilience Solutions. The services that Dynamhex created are a key offering behind an innovative group captive that Zurich launched earlier this year with sustainability at its core. Called Impact Re Ltd., this captive brings together companies that prioritize sustainability in their strategy and values. Prospective members of the captive begin with a sustainability assessment of their carbon emissions and energy consumption, led by Zurich Resilience Solutions, leveraging services created by Dynamhex.

“This is a great example of the innovation that can happen through collaboration,” Santivasi added.

Innovation means more than just technology.

Innovation can be a mindset for doing new things in new ways to address business risks that reach beyond insurance products and services. Companies of all sizes are increasingly focused on finding new ways to build resilience as post-pandemic talent and climate-related challenges dominate the risk landscape.

The insurance industry, and businesses in general, must become more innovative in seeking and retaining talent. Some innovative thinking around apprenticeships; workplace diversity, equity and inclusion (DEI); and wellness, can make a difference.

Apprenticeship programs are challenging the widely held notion that a four-year college degree is a prerequisite for launching and growing a career in business. The insurance industry is creating more opportunities than ever for untapped talent to launch a great career in commercial insurance. Apprenticeships address critical business and societal challenges of our time, including talent shortages and skills gaps, the high cost of college, the need for a diverse workforce to help fuel innovation, and unequal access to educational and professional opportunities in America.

Additionally, a diverse and inclusive work environment helps ensure an organization’s voices are diverse, its behaviors are inclusive, its actions drive equity, and its people feel a sense of belonging. This allows for gathering diverse perspectives and make for a stronger company and a better place to work.

Climate change is the most complex risk facing society today.

“Innovative thinking around climate-related risks can build resilience for the insurance industry and for its customers,” expressed Santivasi. Organizations need to understand the physical and transition risks posed by climate change and to take action to mitigate or adapt to those risks. Effective climate risk management can improve resilience by reducing the frequency or severity of a disrupting event.

The auto industry, including auto dealerships needs to be a part of delivering solutions for protecting our planet, as well. Auto dealers can play a critical role in advancing the adoption of electric vehicles. While EV purchasing is expected to double in the next 10 years, some car buyers are leery of the potential increase in the costs of EV ownership. Dealers can help ease those concerns by offering vehicle protection products to cover some of the costs, including those related to repairs and replacement parts. In 2021, Zurich was among the first to offer these products. 

So, “What is the future of insurance?” Santivasi asked the crowd. “It would be nice if we had a crystal ball to see into the future? But we really don’t need a crystal ball. Led by the needs of our customers, all of us in the insurance industry — or closely connected to it — really must continue to make sure we understand the challenges our society is facing, increase our efforts to collaborate together and enhance our efforts by embracing innovation. That means new technology, and also doing new things in a new way.”