Matt Power, EVP and Head of Strategic Development at Lexington, joins WRIN.tv to discuss the global economy, the ten year anniversary of Katrina, the Affordable Care Act and emerging risks from cyber-attacks, drones and more.
When Mr. Power considers the economy, he focuses on how technology and globalization have created tremendous “connectivity.” He points to the impact of Greece and China on the U.S. economy. Still, he believes the U.S. economy is strong. He advises risk managers to consider the impact of globalization and connectivity on their organizations.
Mr. Power believes the property-casualty industry performed quite well in the aftermath of Hurricane Katrina. Lexington alone paid out over $300 million in claims within the first 90 days after the event. Personally, Mr. Power reflects on the devastation he witnessed in New Orleans upon visiting the area shortly after Katrina. He sees a “new New Orleans” emerging today…one that is more resilient and inspirational. Mr. Power’s biggest take-away, however, is that the private insurance industry is the most efficient mechanism to deploy capital post-event. While government could allocate funds, they could not disseminate those funds efficiently.
Lexington launched a new product to cover losses caused by unmanned aerial vehicles, also known as drones. The risks in operating drones include loss of link, operator error or airborne accidents. Mr. Power believes these risks can be managed through operator training, best practices, and appropriate safety procedures. Moreover, he believes the societal benefits to drones are extreme, from agriculture and water management to infrastructure monitoring, border patrol and public safety.
The Affordable Care Act represents one of the most significant systemic changes in regulatory construct. As a result, it has created significant changes in the healthcare industry. Lexington has witnessed a “frantic pace in M&A activity” within the healthcare industry, which creates fewer risks for underwriters to pursue, while increasing the need for larger, customized risk management solutions.
Mr. Power notes that AIG has been a pioneer in the cyber risk space since the 1990s, which is now a $1.5 billion global business. He sees a change in the frequency and complexity of cyber risk. Risk managers now need to consider regulation and compliance standards that have emerged. Mr. Power sees a need for transparency…and conversation between risk management, operations, systems and the C-Suite. He believes insurers should have a seat at that table. Lexington’s policy focuses on the continuum of risk management for an end-to-end solution.
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