NEIL HARRISON: Thanks, Chloe. Happy to do this.
CHLOE LILLEY: All right, let's kick off. Q1, what trends or key themes have stood out most to you across the claims landscape so far this year?
NEIL HARRISON: So look, it's difficult to be too specific for such a global audience. But I'd say the Q1 of 2025 has been a little bit of a continuation of what we saw in the second half of last year. So a lot of focus on social inflation, perhaps particularly in North America. But that's becoming more of a theme in other parts of the world as well.
Nuclear verdicts, again, a lot of that driven by North America. But again, we're seeing the impact of that, I think, across claim values and claim settlements around the world. There have been a number of fairly significant new losses reported in different lines of business, different industries over the past three to four months, over the first quarter of the year.
And what we're seeing there, perhaps again, is a little bit of focus coming into the legal arena, perhaps a little bit more quickly than we would normally like to see, perhaps a little bit of an adversarial step taken by insurers, but also by some of the insureds, perhaps not letting the claims process, actually do its thing.
And so some of that legal activity can, I think, be a driver of claim values and perhaps extend the claim process a little longer than we would normally like to see. We're also seeing some long outstanding or long open claims coming to closure. And I think that's because there's perhaps a realization from insurers and, indeed, from some buyers that it's best to just reach a negotiated settlement on some of these major losses than allow things to just continue out into the future.
We are seeing a little bit of reconsideration of reserving on the insurer side. We're seeing some resource pressure from adjusting companies. So it's not a great time in the claims world. But you could argue that it never is. There's definitely some complexity right now. And I think that's coming to bear, particularly as we sort of reach the latter part of Q1.
CHLOE LILLEY: Perfect, that's great. And this next question, I know you briefly touched on this. So how are insurers responding to the current claims environment? So are you seeing any shifts in behavior around settlements or collaboration here with us at Willis?
NEIL HARRISON: So we are seeing good collaboration. We're seeing some insurers come to the table and be a little bit more agreeable to discussing early settlement, early resolution, or even resolution, as I said just now, of matters that have been out there for a while. I think there's a level of frustration amongst some insurers that the amount of legal cost that they bear, the amount of resource burden that is placed on leaving a claim open for perhaps longer than it needs to be.
We are seeing a little bit of disconnect between insurers on programs. So where you've got different insurers at different layers in a placement or a quota share arrangement. And so that really comes back to placement structure to a certain extent. We would always like to see a follow the leader clause or a claim reclaim coordination clause wherever possible because those disconnects, I think, are coming into play.
And you could probably argue that elements of that are driven by certain reinsurance placements, putting pressure on the primary insurers in those type of programs. Lastly, again, I think on the insurer side, there are definitely some that are trying to differentiate right now and truly be partners to us, and frankly, more importantly, to clients as well in the claim process.
CHLOE LILLEY: Perfect, and from your perspective, how is technology influencing claims handling right now? Are there any innovation or trends that clients should be aware of?
NEIL HARRISON: So there are. There are lots of AI, Gen AI type initiatives being taken within the insurer community and the adjuster community. And indeed, we have some here. And a lot of that is process based, not necessarily outcome based. So I think the challenge for insurers and for organizations like our own is to make those initiatives and those investments relevant to the buyer, relevant to the client.
I think, as is often the case, technology innovation in claims tends to start in the personal line arena, in the affinity arena as a sort of a testing ground. And then it sort of moves up through the more complex types of risks that, as a specialty broker, we tend to get involved in.
So there's a lot of discussion in claims world about the value that AI and Gen AI can bring, particularly in the claim notification phase, helping to the insurers look for subrogation opportunities, helping insurers minimize fraud, and so on, and so forth. And again, the challenge, I think, for insurers is to make sure that those investments don't just improve their own financial results, but are passed on to clients in some way.
CHLOE LILLEY: So looking ahead, what should clients be thinking about to navigate the rest of 2025 more effectively from a claims standpoint?
NEIL HARRISON: We're obviously having this conversation at a time of geopolitical and economic volatility, right. And that, as is always the case, brings some complexity to the claims situation. So we are not going to see the resource burdens on claims groups within insurers and adjusters change. This complexity in the economic environment is problematic in many ways.
Clients would be well advised to be thinking about early claim resolution, thinking about the importance of the time value of money, thinking about whether or not negotiated settlement early in the process is better than allowing things to run for three or four years. Because calculating things like business interruption and even property damage values at a time of such economic volatility, potential inflation, rumored potential recession all brings complexity.
Clients would be well advised, I think, to be thinking about the broader array of potential D&O claims that come from some of the situations that we're seeing right now around the world thinking about trade credit. And so some of the risk classes that don't normally get brought into focus, when there's ever a time of recession or even a rumor of recession and a time of significant uptick in inflation, particularly retail price inflation, those macroeconomic events really do come to bear in the claims arena.
The last thing I would say is, at a time like this, and again, looking ahead with the volatility, however you describe it, early engagement, early reporting of the claim, and an early discussion, in our case, with us about what a resolution strategy for a loss should look like is absolutely the best advice we could give any client.
CHLOE LILLEY: Yeah, no, that's really good solid advice. Thank you there, Neil. So Neil, thank you for your contribution on this episode of the Marketplace Insights podcast. And we'll see you in the next one.
NEIL HARRISON: Thanks, Chloe.
CHLOE LILLEY: If you have any questions, please feel free to reach out to Neil. And we'll be more than happy to help. Thank you.
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