Covid-19 will alter the way insureds see tail risk: Aon's Case

Covid-19 will change the way businesses around the world perceive remote risk and elevate discussion around this kind of volatility to the C-suite level, Aon group CEO Greg Case told this publication in an exclusive interview.

The long-serving Aon chief executive made the comments as he stressed that Covid-19 amplified the thesis underlying the Willis Towers Watson deal by emphasising the need for the industry to devise innovative solutions to clients' issues.

"We are of the mind that Covid-19 and the current crisis is going to expand the way that clients think about long-term tail risk in their business," he said. "And they're not only going to expand the way they think about it, it's also going to evolve further up in the organisation."

Case said the new mindset would apply to other potential future challenges including climate change and cyber.

"And so these big major long-tail risks and their potential impact on the business will become a bigger and bigger topic – and yet another opportunity for the industry to come forward with solutions that help clients mitigate risk."

Case observed that the current crisis was creating a period of accelerated client evolution. "All of a sudden in a two-month period clients are seeing a level of risk that cuts across all geographies, all segments in a way they haven't seen before.

"They're more open than ever before to try and understand these risks and to pay for them."

Asked about the economy's emergence from the crisis, Case responded: "You know people talk about the new normal: 'We are going to go back to the new normal'.

"We reject the new normal – we prefer to talk about the new better."

Case noted that this new better comprised the expanded view of risk he expected and the accelerated innovation he hoped to see in the sector.

"So if we don't come up with innovation and new solutions of course you revert back to the mean.

"But given the absolute openness [from clients] to engage based on this trauma, what an opportunity for us to come forward with solutions that mitigate these kinds of long-tail risk in business, help clients understand the value around it and literally create net new opportunity."

He concluded: "You don't achieve the new better by running faster, you achieve the new better by running differently."

Just as the Aon CEO stressed that Covid-19 emphasised unmet need for solutions, he argued that the sector's record over recent decades fell short.

The executive noted that the sector had lagged GDP growth for a long time, and that currently it was addressing only one of the top-10 client risks fully, and four more partially. "Over the last 30 years it's become less and less relevant."

Case said this realisation of waning relevance drove the proposed Willis combination, announced in March.

"Client need has evolved faster than the industry. We need to accelerate innovation on behalf of clients," he argued, referencing the firm's Aon United strategy as tangible evidence of its work to date to close the gap.

The Aon CEO explained that by creating scope for more investment in innovation and broadening capabilities, the Willis deal would act as "an acceleration of that mission".

Questioned on the scope for coronavirus-driven delays to regulatory approvals, which would be due in H1 2021, Case said: "Our timeline hasn't changed at all. In fact we have had terrific interactions with regulators on continents all around the world. It turns out this medium [video conferencing] works very, very well for them and they have fully embraced it."

He concluded: "[It's] full speed ahead."

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