In a wide-ranging fireside chat on Tuesday, May 7 at RISKWORLD in San Diego, Chubb Chairman and CEO Evan G. Greenberg and Aon President Eric Andersen delved into how U.S.-China relations drive the global economy, the emergence of artificial intelligence, and how environmental risks continue to influence decision-making among risk and insurance professionals.
Greenberg, who previously served by presidential appointment to the U.S. Trade Representative’s Advisory Committee for Trade Policy and Negotiations, noted that countries are adopting protectionist views and methods that are driving inflation while hindering economic progress. “Countries, [U.S.] included, are putting up tariffs and blocking other products from entering,” Greenberg said. “This puts stress on the supply chain.”
Greenberg said that the top risk facing the United States in the medium-term is its deficit. “We have $34 trillion outstanding,” he said, noting that he expects a$2 trillion-dollar increases this year. He added that Congress’ spending is a key driver, and the deficit will eventually exceed military spending. This is unsustainable since other countries are increasingly unlikely to buy that debt. “We’re monetizing our own debt, so we rely on ourselves to do that,” Greenberg said. “That crowds out money for innovation. That crowds out an ability to grow. This is a topic hiding in plain sight.”
On the topic of U.S.-China relations, Greenberg said that he has met with China’s President Xi Jinping several times in recent months. He characterized the relationship between the two countries one of “technical stability” as opposed to strategic stability, as both countries are dealing with internal risks that has increased tensions.
He noted that while “China has a right to develop itself like any other country,” there is insecurity on the West’s side about their size and scale and governing methods. As for China’s economy, he said he is not optimistic.
“I don’t think they are headed in the right direction,” he said. “They are a more state-directed and state-planned economy. Their private sector is fast but there is a lack of support for the private sector in China. It’s discouraged. They are not confident, so they are not innovating. They are not spending as they ought to be and that impacts all their workers who ultimately are the consumers.”
AI’s impact on insurance was also a key segment of the chat, and Greenberg said that while it is a gamechanger, it has not yet left him “breathless.” He said that the insurance industry will need to explore the potential of large language models to improve efficiency and continue investing in their development and application.
Greenberg and Andersen closed out with a discussion on climate change, which was particularly urgent considering that California was the site of RISKWORLD 2024. Noting that the state grapples with extreme heat, wildfires and floods, they underscored the pivotal role of climate change in shaping insurance markets. They emphasized the imperative integration of environmental, social, and governance (ESG) considerations into decision-making processes. Further, Greenberg said that actions are ultimately what drive insurance rates.
“There are things that motivate society, change economic behavior and then change social behavior,” he added. “Price signals are a very powerful force. Climate insurers do not print money, we intermediate money. The cost of climate change, stating the obvious, is [leading to] much more volatility. I think certain jurisdictions are not adopting policies that are sustainable. This is not a short-term thing that will go away.”