‘You can do well in this business if you do it intelligently’: AIG’s Duperreault

By Erin Ayers on April 2, 2018

NEW YORK CITY — The casualty insurance business can be tough and it – and the industry that takes it on – should be treated with respect, according to Brian Duperreault, president and CEO of American International Group (AIG), who gave the keynote speech here at Advisen’s Casualty Insights Conference on March 29.

“I’ve been involved in large casualty business for 30+ years. It can be good business. But it can be one of the most dangerous risks you can take on in the world,” said Duperreault, who was questioned by Tony DeFelice, managing director and Casualty Practice leader at Aon, after spending about eight months enticing the CEO to join the conference.

“A lot can go wrong. You make a mistake in large casualty business and it’s a huge loss. It should be treated that way,” continued Duperreault.

He added, “If I felt that that business was just impossible to do, I wouldn’t do it. But I haven’t reached that point …. You can do well in this business if you do it intelligently. That’s the game. You wish it could be easier, but you can still win.”

Duperreault took on the role of president and CEO of AIG in May 2017, coming out of retirement for a third time to usher the insurer where he launched his 40-plus-year career through a challenging era. After leading ACE, Marsh, and most recently Hamilton Insurance Group in Bermuda, Duperreault returned to AIG with the memory of his “formative years … learning the business at AIG.”

“My heart said, ‘I’ve got to do it.’ I still bleed AIG blue. The old blue, because we’ve changed it,” Duperrault told the Advisen crowd.

Property & casualty insurers need P&C people to run them, he asserted, questioning boards that opt for non-P&C execs to run insurance companies.

“This business is not like any other business. It’s more like gambling. We’re like professional gamblers,” Duperreault said. “You can’t play every hand. People who don’t know our business come in and make bad decisions because they don’t understand the implications of the risk-taking decisions we make.”

Taking the helm in 2017, a year of record loss for the insurance industry, hasn’t changed Duperreault’s goal of restoring AIG to its former heights by fixing its general insurance business. The plan includes improving the structure of the business, addressing “woefully inadequate” systems, and attracting new or returning talent.

“It’s basically now a process of attention to detail and grinding it out,” he said. “‘Fix the core,’ that’s the mantra. We need to be that go-to company to solve the problems that are emerging.”

Duperreault added that he hopes to gain back some of the business lost by AIG in recent years.

“I want my business back. I’m the incumbent. If I had that business for 10 or 12 years and lost it for two, I’m the incumbent,” he said.

On the topic of technology, Duperreault advocated its use to improve the business of accepting risk, while noting that it can also make companies more efficient or improve the user experience.

“At AIG, we just make decisions about risk every day. That is the fundamental service. Do I want to take that risk? What should be the price? How should I tailor it? Should I find others to share it with?” he said. “The use of technology will have its greatest impact in our analysis of risk and how we take risks. All the other stuff is nice. But it’s about decisions. Can I make better decisions? I want an underwriter who is much better prepared to make the decision.”

Risk modeling, he noted, also offers a tool to assist talented underwriters. Models are “an essential part” of ensuring that underwriters remain the prime decision-makers.

“The model is not going to give you the answer. It’s going to help you, point you in the right direction but there’s more that you need to discern,” Duperreault said. “If you stall too long, you’ve made a de facto decision because the market has moved on.”

It may seem like insurance gets little respect these days, but Duperreault says that’s always been the case.

“When I joined the business, it had a bad image then. Let’s be honest, it’s never had a good image. You’d be at a cocktail party and tell someone you work in insurance and they walk away or yell at you about a problem they had. But it’s critical now. We’ve got a demographic problem,” he said.

With baby boomers retiring and leaving the business, there is a “huge drain in experience and capability.”

Duperreault recommended organizing younger people in organizations to talk up the profession.

“This is a cool business, it’s a really interesting thing that we do,” he said. “It’s the amateur psychologist in you, it’s the detective in you. It’s all of that.”

Editor Erin Ayers can be reached at [email protected]


Erin is an editor at Advisen. She has 15 years of journalism experience. Prior to Advisen, Erin covered property-casualty insurance for 13 years as editor-in-chief of The Standard, New England’s Insurance Weekly. Erin is based in Boston, Mass. Contact Erin at [email protected].