Through the lens sharply: insurance, reinsurance and brokerage community professionals highlight the differences in how they approach risk

Risk & Insurance, April 1, 2004 by Thomas J. Slattery

"Insurance may not be the ultimate solution," Faber says, noting that contractual issues, consensual risk transfer, certain risk control activities, and self-insurance, as examples, may have to be addressed.

On a global basis, he points to AIG's investment and real estate activities as his "most exciting" challenges. He talks about working with the organization's people overseas to identify the kind of insurance that's appropriate and necessary, and of overcoming time differences, currency differences, regulatory issues and language barriers. "And insurance at certain levels just may not be available in the same forms that you're familiar with."

AIG's traditional risks are the same as for anyone who sells a professional service for a fee--notably commercial liability, errors and omissions, and the typical workers' compensation problems you have with repetitive-type jobs spread over a large office work force. (AIG has 80,000 employees worldwide, 60,000 domestically.) The company also has a fleet of about 2,400 automobiles for its loss prevention people in the field, adds Fabel, "so there are the issues of driver training, constant follow-up and driver education."

Where are new and emerging risks coming from? From sources you read about in the newspapers: mold, asbestos and repetitive-motion claims. "These are the key issues which impact employees who occupy large offices," he says.

"We have the same risk and insurance management problems of many other companies," he says. "We share a lot of commonality, so we're always looking to what others are doing to keep ahead of the curve. That helps to take the mystique out of who we are. We have similar problems, we implement similar solutions, for similar efficiencies. And we have similar successes."

Toward this end, AIG is one of a group of insurance companies and financial institutions of like kind--about 30--that meets semi-annually to discuss risk management issues. "If I had a question today at 1 o'clock and sent out an e-mail to the entire group, I could probably count on 8 to 12 replies by the end of the day," he says.

Risk: Through the Eyes of the Middlemen

View the same world through a broker's eye and the conversation about inherent risk turns to managing client relationships, and retaining clients, as the hard market and pricing corrections start to level off.

"As the market begins to close, the focus on client retention will be a much bigger issue," says Corey Gooch, a senior consultant in the international risk management division of Aon.

"It's somewhat of a strategic issue," Gooch says. "If you look at risk management in the broader context, one of the bigger risks for Aon is client turnover."

Also at the top of his list are issues associated with the integration of the numerous acquisitions made by Aon, as well as expansion into emerging markets, like China and India, and understanding the political and regulatory risks inherent in managing these undertakings. "You don't want to make a bad bet in a new venue," he says.