Brian Duperreault

In AIG’s centennial year, Mr. Duperreault spoketo José Manuel Fonseca, Chairman of Brokerslinkand MDS Group CEO, and Jamie Crystal, ExecutiveVice President of Alliant Insurance Services,about getting the right mix of people and structureto secure AIG’s future, the importance of thebroker relationship and putting AIG’s regionalbusinesses back on track. He also shared someof the lessons he has learned from 40 plus yearsin the insurance industry. 

AIG’s historically wholly-owned globalnetwork was legendary. This has beenimpacted by recent divestitures, in particularin Latin America (in 2016 AIG agreed tosell some of its Latin American and Europeanproperty-and-casualty insurance operationsto Fairfax Financial). Do you plan to rebuildthe network with wholly-owned subsidiariesor will you also consider MGA representatives?
We prefer wholly-owned operations asyou can better control their quality and activity.This kind of global network is great formultinational business. They are responsiveand can deliver a consistent product aroundthe world. Having them as part of your companyon a wholly-controlled basis is ideal.One of the great strengths of AIG is itsnetwork and you shouldn’t dismantle this lightly,without real thought. These businesses tookgenerations to establish and I would love to getthem back but that might also take generationsto achieve.It is important to remember that AIG tracesits roots back to Asia. We had an internationalpresence long before we came to the U.S. Infact, we were in Argentina and Brazil beforewe were in America. During the Second WorldWar, when it was very difficult to transactbusiness in Asia and across Europe, the LatinAmerican countries were especially important to AIG. During that period, Argentinakept this company alive and when the warended, it remained a very strong country forus. Perhaps our name should have beenthe International American Group instead!The global network remains a strongand important part of who we are and what wedo, and if this could be made up of morewholly-owned businesses, I’d do it in a heartbeat.But we do not have operations in everycountry, so have always had partnerships withcompanies in some countries and we continueto have these. The network’s service qualityand delivery through these partners is still highand we have made further improvements inhow we do that and how we deliver the product.Let me say, we have no current plans to divestfrom anything!

AIG and Brokerslink have a long-termpartnership. How important is it for insurersand brokers to work together to achieveboth local and global goals? 
I know that it is part of Brokerslink’s DNAto have strong local brokers whose corebusiness is to understand and service their localmarket. That local presence means everything.You have someone there who understandswhat you need to do, to basically satisfy how business is done and the requirements oflocal regulation, or the particular needs of theinsured in that location.The broker relationship is the most importantpartnership we have. We understand thebroker is representing the buyer of our productand recognise there is a process across thetable, but we need each other, too. Thereis a partnership even in that context. We bothrecognise that and, if done right, and I thinkwe are pretty good at it, there is an efficiencyof interaction that takes place. But you stillneed to understand who’s on the other sideof that table. What are they telling you?Can you trust them? And that goes both ways.By dealing with each other day after day,you cut out a lot of the inefficiencies. Differentrisks and different problems, solving themtogether and helping the client. One of themain reasons why AIG has been so successfulis that we embrace the relationship with thebroker; we don’t want to supplant them orgo in a different direction. We recognise theirvalue and that goes way, way back. That wastrue then and is even truer today.Are there areas where the broker can up theirgame? Technology is one. If we are going totackle some of the inefficiencies, we cannot dothat alone. It is in both our interests to do that.

What was the rationale behind creating thenew business units of General Insurance,Life & Retirement and Blackboard Insurance in September 2017? Is this to do withyour ethos of having the right foundationsto enable the business to grow? 
We were organised along a Personal Linesand Life & Retirement business (which ispredominately in the U.S.) versus Commercialand that made no sense to me. The PersonalLines, General and Commercial businessesshared balance sheets, offices, facilitiesand capabilities and yet they somehow weredivided. I believe General Insurance shouldbe General Insurance and Life & Retirementshould be Life & Retirement. Both are veryimportant component parts of the company,but they should be managed as uniqueentities. That was the primary reason forrestructuring. The overall structure of theseunits is a natural division of how the companyshould be organised.And it has helped us further organise ourspecialty capabilities, whether that is globallyor by the kind of business we do. AIGhas always been noted for its specialisation.Because of the efficiencies we can achieve andbecause of our size, we could put specialiststogether that had enormous capabilitieson a global scale. Some companies want to bespecialist, but they can never really scaleup enough to truly deliver a specialty product.Historically, AIG had a whole portfolio ofthese products, but we got a little too generaland blended that all together, and I didn’tthink this was the best way to operate.We are now back to standing up units thatare specialised, whether it’s in high excess,Directors & Officers or Accident & Health:each unit has its own characteristics. Weare putting the skillsets together that knowthe risks so well so that when a broker turnsup with a problem, we know how to handleit. The broker may not have seen the problembefore, but we have. That’s why we startedwith changing the organisational structureand have then filtered the principlesand beliefs down to the units. That’s the gameplan and, by the way, that was also the planwhen I was cutting my teeth in this companyin the 1970s. It’s getting back to what madeus great. 

Can you explain more about the driver behindAIG’s investments in Blackboard and Attune? 
Attune and, particularly, BlackboardInsurance, are exciting initiatives in the digitaland technical space. We have lots of business, particularly in the U.S., which is focused onlarge, complex commercial risks. We haven’thad as much success in the smaller, lesscomplicated risk space. The idea was to lookat how we address opportunities in thatarea. I had had this idea when I was runningHamilton Insurance Group and developedit in partnership with AIG.Why did I want to bring it to AIG? Well, itstarted with a company called Two SigmaInvestments, a firm that does quant investingusing data and analytics to make very efficientdecisions on some very complicated things.They are sourcing vast amounts of data anddeveloping algorithms to enable them to takedifferent views. This is exactly what we doas underwriters and insurers: we pull in lotsof data from different sources to get a viewof risk. Because of this similarity – albeit theyare doing it to a much more sophisticatedlevel – I wanted to partner with them to bringthis whole world of data science, analyticsand decision making and apply it to theinsurance space. It has been a labour of loveto set the technology up, but we are on our way.The challenges of servicing these smallerbusinesses with high frictional costs are shared by brokers and insurers. Most brokers havea minimum premium to address thesefrictional costs, and the actual loss componentof the cost is relevantly small. If the brokeris taking in minimum premiums and notmaking money, they are not happy. If you cansqueeze out the frictional components, theneveryone is happy.But by using data and analytics, you can getto a straight-through processing modelwhere you can serve small business more costeffectively. These businesses then benefitfrom having access to more complex insurancesolutions that were not available to them before.Taking advantage of this developing sciencemeans you can not only make more effectivedecisions, but you can make better ones. Moreeffective and efficient decisions – now you aretwice blessed.We are not talking about the machines takingover. But if you have a small and uncomplexrisk that can be analysed and a decision madejust on the data, without human intervention,then that is fine. However, as soon as youget into the complex world, and of course, SMEscan have some complexity and somethingdifferent about them, you must have a person involved because it’s a harder decision.The machine cannot make the decisions,the technology has to enable humans to makebetter decisions.In terms of Blackboard Insurance, we believethat 90% of the business can be triaged withtechnology assessing and pricing the risk.It then presents the 10% that needs peopleto deal with. Currently, 100% of these risks aregetting the attention of the underwriterand that’s inefficient. By marrying the processwith data science, you create an efficiency sothe underwriter can apply their genius whereit’s appropriate and not waste their time.We call it the ‘10x factor’; we want to makethem 10 times more efficient.

You have talked about ‘having the rightpeople in the right roles pursuing the rightstrategy’. Since May 2017, AIG has made30 senior appointments, internal promotionsand hires across the company, includingattracting back some former employees.What has driven these developments?
The company had lost a lot of talent over theyears. But, just to qualify that, there is a lotof talent in AIG. When I came in, I was afraidwe didn’t have the talent we needed, but, infact, we had plenty of it. However, we hadthinned out the talent base; you could say wehad used up ‘our bench’.I also knew we needed to bring in additionaltalent; people from other places who hadseen things done differently and who couldshare that experience and help create a properblend of knowledge and expertise, withcultural and institutional knowledge.I knew why I came and I knew why somepeople had stayed; we all love the company.However, I wasn’t sure if I could conveythat level of appreciation to others and I worriedabout whether this talent would come to AIG.But there is an amazing energy around thiscompany about what we are doing, and wehave attracted a lot of great people. Some hadworked here before and wanted to come backbecause they had the same feelings aboutthe place as I do. Others were saying "what’sgoing on over there? That sounds like a placeI want to be.” This energy and the interestinggroup of people we have, makes this a missionworthy of the taking. It really was a verypleasant surprise to see the attraction of AIGto these people.In terms of what we look for in our people,first and foremost, the skillsets need to fit thejob. There is a culture in AIG which we do notwant to lose. It is about being hard working, being entrepreneurial, solving problems, beingexperts and service-orientated. I’m delightedto say the new people we have seen cominginto the company very much fit that. As we lookat what is needed going forward, I think wecan bring in a lot more.

After 21 years at AIG, you left to pursue othersenior roles. What attracted you back to AIGin 2017? 
I was gone for about 22 years and duringthat time I did wrestle with the question, whatwould I do if I was asked, would I agree to comeback? And then I was.The decision was a head versus heart question.My head said, "don’t do it”. Now, that’s notbecause I shrank from the work. I had a greatjob at Hamilton Insurance Group. Wewere innovative, and I was surrounded byvery creative people and we were tryingto do something different. It was fun going towork every day and I was having a great time.My head said, "you should just do that, why would you want to lose this for somethingelse?” But my heart was saying, "you can’tturn this down!” How could I turn down thecompany that gave me my start? I still hadfriends there and it needed me, so how canI say no? So, my heart won. If I look at allthe decisions I have made in life, the best oneswere from the heart, not the head.When I first joined AIG in 1973 there wasAmerican International Underwriters (AIU)and the general insurance operation inthe U.S. AIU had long-serving staff. I recallregularly attending 50th and 60th year workanniversaries. But the U.S. operation wasstill a young business, only having reallygot going in the late 1960s. It was a melting potof activity; everyone in the business hadcome from somewhere else. In fact, I was oneof the first trainees. That energy was whatcreated our great domestic operationsand it is still one of the strongest assets in thecompany today.The cross pollination between theinstitutional, long-serving and the energy ofthe new worked. The blending of the energyof the domestic business and the continuity andhistory of the international business – whichI experienced for myself – worked at AIG andmade for a great company.

You’ve been in the insurance sector for over40 years, what are the most significantchanges you’ve witnessed over this time?
Technology must be the major change. Theinsurance industry is far more sophisticatedin terms of how we use data and modelling thanwhen I first joined the business.But perhaps the biggest change I have seenis around market sophistication. When Istarted, the U.S. was a kind of "Wild West”.Regulation was just starting but people wereused to cartel-like approaches where therates were fixed, and the only competition waswho could get the broker to give them thebusiness. And then deregulation hit the country.The lack of sophistication meant people werenot prepared. There were a couple of bigcrises and for some, the pricing got so bad thatcompanies were starting to fail. As a resultof this cauldron of competitive activity, the onesthat survived ended up being very sophisticated.Then this all went global. Up to that point,most markets globally were not as competitiveor as sophisticated as the U.S. Today, theirsophistication is global: how business is done,the kind of skillsets you need to bring, andinnovation is truly global.The industry’s reputation in some sectorsremains an issue to be tackled. We are in abusiness where most of the time, personallines and small commercial customers pay usmoney and they get protection. When theyear is over and nothing has happened, theyask "did I make a good trade there, did Iactually get a good deal?”. The only time theymight feel they get a ‘good deal’ is whenthey have a loss and a claim is paid, but theyexperienced the loss and that is not a good day!So, it is hard to get a warm and fuzzy feelingabout your insurance policy and yourinsurance company. It’s probably differentfor the broker – they are the client’s best friend. 
We, in the risk-taking business, are always ata too large disadvantage when it comesto how people perceive us. It has been the samesince I started in the industry and there hasn’tbeen any solution to it yet.However, in the larger and more sophisticatedbuying community, it is a different storyentirely. One of the big questions I had whenI walked back in the door here was, "whatis the relationship with the risk managementcommunity like today compared to whenI left”? The answer was it remains strong. Wehave great relationships with this community,and I was so happy with the reception Ireceived from the buying community whenI came back to AIG. 


What advice would you give to someonestarting out in the insurance sector?
First, there’s advice I’d give to anyone goinginto any business sector. Do something youlove and do it with people you feel comfortablearound. If neither of those things are there, then don’t do it and go somewhere else.For someone considering a career ininsurance, I’d say I cannot think of a moreinteresting way to make a living. It’s fascinatingand we touch every element of society.The skillsets required are quite diverse so wewelcome all. If you have interest in anythingfrom history to technology or pretty muchanything in between, there’s a job for you inthe company.The insurance industry does good for society.We put lives back together, we help companies,we take risk off the shoulders of our clients.The world is running away from risk, but weare the ones saying we’ll step in for you. Wedo it in a very interesting way, the intellectualchallenge is huge, and we have fun! You can’tfind that anywhere else.Like many of us in the industry, I kind oftripped into insurance and I am so glad I did.I didn’t realise what I was getting into. Butif I’d known then what I know now, I wouldn’thave hesitated. 

Who in the industry influenced you the mostand who do you particularly admire for theircontribution? 
This is an industry that attracts good peopleand there have been a lot of wonderful peopleI have met and known over the years. Butat the top of the list is Hank Greenberg. No oneelse comes close. He’s an amazing man andstill going strong at 93 (He turns 94 in May 2019).How do you describe Hank? He’s a force ofnature and incredibly smart. There is a palpablecharisma about him; very few people havethis. When he walks in to the room, theatmosphere changes.He was frightening but not because of hiswill. He starts asking you questions, andit doesn’t matter whether you’re the actuary,the accountant, underwriter, claims person ortechnologist, he will know the subject matterbetter than you do!He has a drive for excellence, doing it rightand, if there was a problem, fixing it before itbecame one. He was instrumental in creatingthis place (AIG) and the knowledge base.We learned from him and he made us all betterat what we do. 

How is AIG celebrating its 100th birthday? 
As a truly international business, AIG willmark its centennial this year on a truly globalscale. We will be marking this very specialmilestone with a whole series of events andactivities across the world involving ourbusinesses, operations, staff, brokers and clients.At the heart of the celebrations will be ourpeople: they are our greatest strength andnone of this would have been possible withoutthem. We will focus on recognising how ouremployees, past and present, have deliveredfor our clients and served our communities.We will be sharing their stories, successes andthe many contributions they make each day,excelling at risk, living up to their promises,and helping to make a better world.The list of "firsts” that have been achievedsince Cornelius Vander Starr founded thecompanies that eventually became AIG openedhis is long. It includes becoming the firstforeign company licensed in Japan afterWorld War II, the first foreign insurer to opena representative office in Beijing since theCommunist Revolution and to gain licensesfrom former USSR countries after the fall ofthe Soviet Union. AIG has also had pioneeringroles in launching numerous insurancecoverages, such as D&O, environmentalimpairment liability and cyber risk coverage.The insurance industry will no doubtlook vastly different in the future so thisanniversary is also an opportunity to considerhow we will position the company as a growing,profitable leader for the next century.There is a dedicated website sharing ourcentennial stories and celebrations –www.100.aig – which I hope the FULLCOVERreaders will find interesting. •