Seems obvious but I thought it might be instructive to compile a few reasons which separate large brokers from the rest of the pack. I read somewhere that 80 percent of brokerages and agencies in the United States remain independently owned.

Whether true or not there are a lot of small brokerages and agencies serving the needs a small and middle-sized companies – and likely do so very well.

So back to the correlation between large companies and large insurance brokers. Thi correlation can be attributed to a number of factors:

Complexity of Needs: Large companies typically have more complex and diverse insurance needs compared to smaller businesses. They require coverage for a wide range of risks, including property, liability, employee benefits, and specialized industry-specific risks. Large insurance brokers have the expertise and resources to handle these complex needs.

Customized Solutions: Large companies often need customized insurance solutions tailored to their specific operations and risk profiles. Large insurance brokers have the capacity to design and negotiate bespoke insurance programs, ensuring comprehensive coverage that aligns with the company's risk management strategy.

Global Reach: Many large companies operate on a global scale, necessitating insurance coverage in multiple jurisdictions. Large insurance brokers have a global presence and can provide consistent service and coverage across different countries, which smaller brokers may not be able to offer. Consistent and uniform service is a challenge for even the largest of the big ones – it isn’t easy. This is a topic for another time.

Buying Power: Large insurance brokers often have significant leverage with insurance carriers due to the volume of business they bring. This can result in better terms, conditions, and pricing for their clients, which is particularly beneficial for large companies seeking to optimize their insurance costs.

Risk Management Services: Large brokers offer extensive risk management and consulting services, including loss prevention, claims management, and compliance support. These services are valuable to large companies looking to mitigate risks and manage their insurance programs effectively. With smaller brokers and agencies, the task of providing loss prevention is often not done or left to the carrier, if at all.

Technology and Data Analytics: Large brokers invest heavily in technology and data analytics to provide advanced risk assessment and management tools. These capabilities are attractive to large companies that prioritize data-driven decision-making in their risk management processes.

Regulatory Compliance: Large companies face stringent regulatory requirements and need insurance brokers who are well-versed in compliance issues across different regions and industries. Large brokers typically have specialized teams to ensure that their clients remain compliant with all relevant regulations.

In summary, the correlation between large companies and large insurance brokers is driven by the need for expertise, global reach, customized solutions, and comprehensive risk management services that large brokers are well-equipped to provide.

Parting thought

ID, remove VPN Apps on your personal devices

I just read about the 911 S5 VPN/proxy service and was immediately alarmed. I was unsure if any of my computers had been compromised because during travel I use several VPNs. You can be sure your company’s IT people have this covered but what about your personal devices?

You should know more about this.

Does 911 S5 just affect Windows users?

The 911 S5 proxy service primarily affects users of Windows, but it doesn't exclusively target them. Here’s an overview of the situation:

• Primary Target: The 911 S5 service is a proxy/VPN service that was heavily used to distribute residential proxies. Many of the installations and tools provided by 911 S5 were designed to work on Windows, making Windows users the primary target.
• Malware and Trojans: The 911 S5 service often involved the distribution of malware and Trojans. These malicious programs were typically designed to compromise Windows systems, turning them into proxy nodes. The Windows operating system's prevalence and certain security vulnerabilities made it a common target for these types of attacks.
• Other Operating Systems: While the primary focus was on Windows, it's important to note that no operating system is completely immune to threats. Users on macOS, Linux, and mobile platforms can also be affected if they are tricked into installing malicious software, especially if they use cross-platform applications or if attackers find vulnerabilities in non-Windows systems.
• User Behavior and Practices: The risk of being affected also depends on user behavior. Downloading software from untrusted sources, falling for phishing schemes, or using compromised websites can lead to infection, regardless of the operating system. Therefore, while the technical aspect of 911 S5 primarily targeted Windows, unsafe practices can affect users across different platforms.

In summary, while 911 S5’s tools and malware were mainly designed for Windows systems, users on other operating systems should still practice good security hygiene to avoid similar threats.

How to Identify and Remove VPN Applications That Contain 911 S5 Back Doors

Every step from grain fields, slaughterhouses, transport, labor, political and credit risks including currency inconvertibility, repatriation risks (and so much more) to the end-user fast food outlet were identified and amazingly ‘packaged’ into a single policy.

This had never been done before. But then times were different then than today. Now we face a plethora of risks most of which didn’t exist in the 1980s:

• Digital Transformation
• Financial Challenges
• Geopolitical Instability
• Aftermath of Covid
• ESG way of working
• Changes in consumer demand
• Growing risk of cyber attacks

Thinking through supply chain risks is critically important when structuring a global insurance program and using insurance when doable.

It’s nearly impossible to plan accurately and precisely for a number of reasons, the big one being geopolitical developments in an ever-changing landscape.

Geopolitical risks arise – logically – from geopolitical developments:

• Tensions with China
• Russia / Ukraine war
• Coups in Africa
• Israel / Hamas war
• Sanctioned and other Government-imposed company restrictions
• and the oldest trick in the book: Tariffs

To begin you must consider and understand what supply chain issues arise due to geopolitical risks.

• Putting access to important suppliers at risk
  • Ukrainian suppliers of neon
• Making it difficult for suppliers to meet quality and delivery commitments
  • High-tech products from Israel
• ·Limiting supplies and raw materials
  • Rare earths from China (FYI, rare earths aren’t all that rare but China invested heavily in the mining sector)
• ·Pushing global and regional prices higher
  • Semiconductors
•  Increasing supply chain costs
  • Developing new manufacturing suppliers
•  Complicating logistics
  • Unavailable shipping routes

As indicated above there are many other risks. Climate disasters. New tariffs and sanctions. Pandemic-induced shortages. Military conflicts in multiple regions.

Each risk event introduces economic shockwaves that underscore the importance of geographically diverse supply chains for companies.

And new risks emerge when moving supply chains. For example, doing business is a new country with unfamiliar rules and regulations to name just two challenges. Other challenges might include terrorism, bribery, financial criminality, human trafficking or other risks.

The changing shape of global supply chains

A tale of two canals

• In late 2023, military conflict and extreme weather created new challenges for commerce
  • Red Sea attacks impacted traffic through the adjoining Suez Canal
  • An extended, unprecedented drought in Panama sharply reduced the supply of water to the canal. The Panama Canal locks are a lock system that lifts ships up 85 feet (26 metres) to the main elevation of the Panama Canal and down again. 5% of global trade transits through this canal system

Conflict and hidden risk

–      The invasion of Ukraine impacted the world’s largest supplier of neon (Neon is a colorless, odorless, inert monatomic gas under standard conditions, with approximately two-thirds the density of air. Uses of neon include lightning arrestors, high-voltage indicators, television tubes and meter tubes.)

–      The October 7 attacks by Hamas triggered a massive calling up of reserves by the Israeli Defence Force. This left thousands of Israeli-based companies without their employees – including many suppliers in the global technology space.

The U.S. and China reshape trade ties

–      U.S. companies are diversifying their supply chains and reducing their reliance on China

–      Countries like India, Mexico and Vietnam with favorable geography, low business costs and existing manufacturing capabilities stand to gain the most as these dynamics play out.

How can geopolitical risks be managed?

What supply chain issues do geopolitical risks create?

As above,

•     Putting access to important suppliers at risk
•     Making it difficult for suppliers to meet quality and delivery commitments
•     Limiting supplies and raw materials
•     Pushing global and regional prices higher
•     Increasing supply chain costs
•     Complicating logistics

Mitigation options include:

•  Prepare a risk-informed sourcing plan (e.g., investment in qualifying new suppliers)
•  Internally finance higher inventory levels
•  Price hedging instruments like airlines do with fuel costs, also insurance to the extent it is available
•  Internally finance longer lead times and higher costs

So how do you navigate these challenges?

• Reduce silos. What does this mean? Businesses must avoid treating each source of risk as a silo. Rather they must look at risks holistically, considering how they interrelate with one another – because invariably there are commonalities. 
• Data analytics
  • Collecting, sharing and analyzing data provides greater (clearer) visibility and agility
• Pro-active mitigation
  • Given their importance, complexity and vulnerability, supply chain risks are now front and center in the C-Suite
  • Proactive risk assessment is the new normal. Gone is the old model of reactive management that only becomes a priority when disruption strikes.

People are going to have to be brave and push the envelope in this new world. The old standbys are gone. There are no off-the-bookshelf solutions. And while not all the risks might be identifiable, it makes sense to prioritize the risks and focus on the most important ones. Then make a plan to mitigate what could become an economic disaster. 

I wrote this piece after listening to a RIMS-sponsored webinar (Resilience in Turbulent Times) presented by James Hargreave, Director, Data Analytics Practice Group and Andrei Quinn-Barabanov, Sr. Director Supply Chain Risks, Moody’s

Family discussion

On a personal note, I read and distributed the below Wall Street Journal article to my family:

On Columbia University and Coach Handbags (link to article)

A degree’s value, in both money and status, depends on the reputation of the institution’s brand.

My son (NYU Stern grad) quickly replied: “I feel like this article would’ve been more meaningful if written by someone who went to an Ivy. 

I have a simple solution for these protesters to obtain moral clarity and prevent their schools from making hard choices about their actions: simplify your request in protest. 

Make all protests about a change of government in Israel and resignation of Benjamin Netanyahu.

Then you don’t ever run the risk of conflating statements against Jews or the people of Israel (or even the nation of Israel, a democracy), instead of the real issue at hand: the current government of Israel. 

Presently, the protesters (I didn’t know this until recently), are primarily asking for their schools to divest from any programs or investments that involve Israel - silly of course because Israel is a beautiful democracy and high-tech hub that’s an example for the region. 

Instead, they should focus on calling for the resignation of president ordering strikes killing kids - seems obvious to me?”

My son-in-law (USC Leventhal School of Accounting) followed with: “This article would mean a bit more to me if there weren't so many protests at non-Ivy schools. Maybe it’s more of a ‘younger Americans are anti-war’ theme than an indictment on the ROI of an Ivy League degree. Who knows.

Meanwhile, don't take your eye off China...”

My son came back with: “Hard agree. Also, China (through TikTok and I’m sure other means) has been majorly signal boosting misinformation and content to drive protests to divide Democratic coalition and increase likelihood of a Trump election + degrading of US power/influence.

https://www.nbcnews.com/news/amp/rcna124476”

I assure you these two make dinner conversation last long into the night. It’s important to listen, especially as I get older, to develop a clearer understanding of how younger future leaders of our country think and perceive the risks.

With my family I had the pleasure of attending a wedding this past weekend in NY State up the Hudson a bit from NYC. Apart from a few of us ‘oldies’, it seemed the entire cohort of a recent Stanford Business School class was present. It was an interesting mix of thirty-something-year-olds who acted well beyond their years. It was reassuring to see this group of future leaders smiling, behaving, and talking reasonably about things that need to be talked about.

With so many talk shows and ‘news’ outlets, it was super refreshing to be among smart young people who ‘get it.’ I am now more hopeful that cooler heads will prevail. As I write these closing lines, the TV in the background is announcing that the President of Columbia has given the order for protestors to clear out or face suspension. Hip hip hurray. As one of the aforementioned SBS business school graduates who now teaches at Columbia told me, the school has been using SMS to alert students and faculty how to enter campus, where and what to avoid so it’s not difficult to recognize that many of the protestors might not even belong on campus. Once again, the media needs to get its reporting fact checked.

Parting thoughts

From my iPhone ‘Notes’:

Why not talk about how we are alike instead of how we are so different.

When seeking advice from people who know more than you, tell them what you plan to do first and then ask them for their reaction.

Advanced data analytics techniques can be used to analyze vast amounts of data from various sources such as historical claims, weather patterns, demographic information, and market trends. This enables insurers to better assess risks, identify emerging trends, and price policies more accurately.

Machine Learning and AI for Underwriting

Machine learning algorithms can automate and enhance the underwriting process by analyzing applicant data in real-time to determine risk levels and appropriate coverage. AI-driven underwriting can improve efficiency, reduce manual errors, and offer more personalized policies.

Blockchain for Transparency and Fraud Prevention

Blockchain technology can increase transparency and security in insurance transactions by providing an immutable record of policyholder information, claims history, and contractual agreements. This can help prevent fraud and streamline processes such as claims processing and policy management.

IoT Devices for Risk Monitoring

Internet of Things (IoT) devices such as sensors and telematics can collect real-time data on insured assets, vehicles, and properties. Insurers can use this data to monitor risks, offer usage-based insurance, and provide proactive risk mitigation services to policyholders.

Digital Platforms for Customer Engagement

User-friendly digital platforms and mobile apps can enhance customer experience by providing convenient access to policy information, claims filing, and customer support services. These platforms can also offer educational resources and tools to help businesses understand their insurance needs better.

Predictive Analytics for Claims Management

Predictive analytics can help insurers anticipate and manage claims more effectively by identifying patterns and trends that indicate potential risks or fraudulent activities. This allows insurers to allocate resources more efficiently and expedite the claims resolution process.

Automated Underwriting and Policy Administration

Automated underwriting systems and policy administration software can streamline workflows, reduce administrative overhead, and improve turnaround times for policy issuance and endorsements. This enables insurers to scale their operations more efficiently and offer competitive pricing to customers.

Cybersecurity Solutions for Data Protection

As cyber threats continue to evolve, insurers can leverage advanced cybersecurity solutions to protect sensitive customer data, prevent data breaches, and comply with regulatory requirements. This is particularly important for businesses handling sensitive information and intellectual property.

All the best to everyone and I’ll return with more ideas and things to think about next month.

Alex

Over 40 national elections involving a potential 6 billion voters going to the polls are due to take place this year. They could leave the world looking rather different by the end of the year. The potential of one set of elections to influence the next is endless, especially as they are taking place at a time of heightened geo-political tensions.

Ok, so that was negative. There are though quite a few important areas of positivity you want to keep an eye on in 2024. While these may not hit everyone’s wish list, each of these is important.

Technological Advancements:

• Continued progress in artificial intelligence, machine learning, and automation.
• Potential breakthroughs in quantum computing and other cutting-edge technologies.

Healthcare Innovations:

• Advancements in medical research, potentially leading to new treatments or breakthroughs.
• Ongoing efforts to address and manage global health challenges, such as the COVID-19 pandemic.

Renewable Energy and Sustainability:

• Increased focus on renewable energy sources and sustainable practices.
• Advances in technology to combat climate change and reduce environmental impact.

Space Exploration:

• Progress in space missions, including efforts to return humans to the Moon and explore Mars.
• Developments in satellite technology and space tourism.

Global Economic Trends:

• Adjustments in the global economy based on geopolitical events and trade dynamics.
• Innovations in financial technologies and changes in investment landscapes.

Social and Cultural Changes:

• Evolution of social norms and cultural dynamics.
• Continued discussions and actions around diversity, equity, and inclusion.

Remote Work and Education:

• Further integration of remote work and online learning into mainstream practices.
• Technological enhancements in virtual collaboration tools and platforms.

Biotechnology and Health Breakthroughs:

• Advances in personalized medicine and gene therapies.
• Progress in the development of vaccines and treatments for various diseases.

Cybersecurity Developments:

• Increased focus on cybersecurity measures and protection against cyber threats.
• Technological innovations to enhance digital security.

Political and Geopolitical Shifts:

• Elections and potential changes in political leadership around the world.
• Ongoing geopolitical dynamics and international relations.

Other wireless providers across the world, including Japan’s KDDI, Australia’s Optus, New Zealand’s One NZ, Canada’s Rogers will collaborate with SpaceX to launch direct-to-cell technology. The direct-to-cell service at first will begin with text messaging followed by voice and data capabilities in the coming years, T-Mobile said.

Not being an expert, I asked Chat GPT “What are the advantages of direct-to-cell service from StarLink satellites?”

1. Ubiquitous Coverage: Satellites in low Earth orbit (LEO) can provide coverage to remote or underserved areas where terrestrial infrastructure is lacking or costly to deploy.
2. Low Latency: Traditional satellite internet services often suffer from high latency due to the distance signals must travel to geostationary satellites and back. Starlink’s LEO satellites are closer to Earth, potentially reducing this latency significantly.
3. High Data Throughput: With a large number of satellites in the constellation and advanced communication technology, Starlink can offer higher data throughput compared to traditional satellite services.
4. Resilience: Satellite-based services can be more resilient to terrestrial disruptions such as natural disasters or infrastructure failures, providing an alternative means of communication.
5. Scalability: The modular nature of the satellite constellation allows for relatively easy expansion and scalability, potentially enabling rapid deployment in new regions or to meet increased demand.
6. Competition and Market Dynamics: Introducing a new player like Starlink into the telecommunications market could foster competition, potentially leading to improved service offerings, pricing, and innovation in the industry.
7. Flexibility for Cellular Operators: Direct-to-cell service from Starlink could provide cellular operators with additional options for backhaul connectivity, potentially reducing costs and improving service reliability.

Another possibility is that property insurers will seriously begin to use parametric insurance to manage risks like flood and wind which would remove these perils from their underwriting which will allow for better results because many of the other perils can be quantified.

As I reflect on the past and consider what’s in store for the new year, it’s useful to take a broader and longer look back to get a sense of what the future might look like.

I was very fortunate to have begun my career at Rollins Burdick Hunter Company based in Chicago. Led by luminaries Adrian Palmer (chairman), his brother Karl and George S. Burrows, both as vice chairs. It was a very good team – all very smart. Adrian was a deal maker and stuck by his word. Karl was an exceptional people man. George was a seminal deep thinker, product innovator and true gentleman. I could go on now with stories some of which I’ve published in the IRL over the years and some still to be recalled and written, but first I need to stay the course and share what my former leader Pat Ryan said recently in a yearend article in the Insurance Journal.

But first, a little history. Pat acquired Rollins Burdick Hunter (7^th largest broker) as a first move towards building Aon into the global advisory and brokerage it is today. I was very fortunate to have been along for this adventure – Ryan acquired RBH 1982/3, retired from Aon in the summer of 2008, and because Pat never retires he founded Ryan Specialty Group in 2010 which plays to all the strengths of today’s insurance business specializing in wholesale brokerage, insurance underwriting managers and other specialty services to brokers, agents and insurers. Now his quote:

“In thinking about the insurance industry and what’s occurred over the past 100 years, the biggest change in my opinion has been in the attitude shift towards the intermediary. In the 1980s and 1990s, conventional wisdom was that the insurance agent and broker was going to be a disintermediated, that with technology innovation, carriers were going to go direct to insureds bypassing the agent and broker. There was a lack of investment in the brokerages during this time. All of this flipped with the .com bust in 2000.

Technology was not the answer, but the value add that an agent and broker brings to a client with their advice and advocacy was really important. With this shift and realization, the advent of the global broker came to be. In the 1980s and 1990s, there were really only two large brokers and no real global broker.

Since 2000, there are now numerous global brokers, and investment money is flowing into this sector. This attitude shift is what I believe has been the major change in the industry over the past 100 years. In my opinion, the US agent and broker is the most valuable asset in the insurance industry.” ~ Patrick G. Ryan, Ryan Specialty Founder, Chairman & CEO.

Several sites to read more about PGR include:

https://www.insurancehalloffame.org/patrick-g-ryan-simple

https://www.insurancejournal.com/news/national/2008/03/20/88417.htm

https://ryanspecialty.com/leader/patrick-g-ryan/

So, the future of insurance is bright because the world needs insurance. And companies such as Pat Ryan’s will continue to expand and offer advice and products in an ever-changing world. Study Ryan Specialty and you will learn.

On a final note, I believe that the insurance industry is one of the best places to work and this is especially true for women. From my earliest days at Rollins Burdick Hunter some of my most talented colleagues were women. Don’t worry guys, there’s still room for us but if you want good sound advice, ask a women or your wife. Happy 2024!