CEO, Global Specialties
Vice Chairman of International Operations
Over 90 years of clarity, quantitative science, and putting clients first.
At the beginning of the 20th Century, cotton production was the most important commercial enterprise in the American South, making the insurability of harvested cotton vital to the economic stability of the region. As a young man in the cotton insurance business, Guy Carpenter discovered that the business was haphazard and reactive. A year of big losses pushed the next year’s premiums too high; a lucky year sent prices down, often exposing insurers and reinsurers to more risk than they had bargained for.
Carpenter had a better idea: rates based on a rolling average of losses over many years. The rolling average identified the signal in the noise of the year-to-year fluctuations. The “Carpenter Plan” enabled insurance of all losses over a certain level. For the first time, producers and insurers could anticipate rates and manage costs.
The insight that data – the more the better – could help clients anticipate perils and measure risks put Guy Carpenter on a trajectory that is still transforming the industry. In 1923 Carpenter met with cotton insurance brokers Henry W. Marsh and Donald R. McLennan during a transatlantic crossing. The merged firm would take the nascent science of quantitative analytics beyond cotton. Along with quantitative precision, precise language became a hallmark of the firm.
Carpenter insisted on clarity: contracts were more inclusive, citing only those perils that were excluded. Contract language written by Carpenter himself still appears in reinsurance contracts issued by our company and its competitors around the world.
Guy Carpenter continues to serve some of its original clients – and clients that have come to us in every decade since. For them, and those who join us today, the durability of the firm’s leadership is more than a fact. It is a promise.
Reproduced with the permission of Guy Carpenter & Co. Ltd. Copyright Guy Carpenter & Co. Ltd. All rights reserved.