March 22, 2012 by Daryl Angier
Give me a moment to adjust the turban I borrowed from Carnac the Magnificent as I look forward into 2012 and make some predictions about what the year will hold.
Canada will experience its first $2 billion catastrophe when a meteor crashes into the financial district of downtown Toronto. One chunk will neatly destroy the still-unfinished Trump Tower, to the joy of numerous investors trying to get their money out of the project. The bank buildings will also be devastated but insurer offices will be miraculously spared.
The consolidation trend will go nuclear when a major commercial insurer like Chubb or Chartis decides to buy the entire operations of a large brokerage like Aon or Willis. If you’re going to vertically integrate, why not go all the way? Related prediction: heads will explode throughout the industry.
The problem with auto insurance fraud in Ontario will be solved when Toronto mayor Rob Ford, after watching Steven Spielberg’s Minority Report one Saturday, unveils his new master plan for transit in the GTA: a massive network of driverless cars like the one in the movie.
There will be a Republican sitting in the White House by this time next year: Ron Paul. The libertarian cult of Ayn Rand that has been steadily taking over GOP thinking reaches its ultimate conclusion with the installation of its most prominent proponent. Within his first 100 days in office, Paul scraps all entitlement programs, causing seniors and the unemployed to pelt the president with boxes of macaroni at speaking engagements. Prospects for a speedy economic recovery for the US will somehow remain bleak, much to Paul’s chagrin.
The Toronto Maple Leafs will win the Stanley Cup, the Montreal Alouettes will jump leagues and become the first Canadian team in the NFL, and the attendance problems in Major League Baseball will reach a nadir, with many teams playing games in entirely empty stadiums.
Kidding aside, what is becoming obvious in the industry is that the scope, speed and impact of the forces that shape insurance pricing and risk management practices—weather patterns, economic prospects, political developments—are changing and becoming increasingly complex every year. It is getting much harder to predict the future based on what has happened in the past. How the industry will confront this challenge, whether through new modeling techniques or business practices, should be on everyone’s mind this year.
This story was originally published by Canadian Insurance Top Broker.