More than 50% of the world’s population lives in cities. By 2050, this figure may reach nearly 70%, posing a challenge to city governments. How should cities evolve to support ever larger, more complex and more connected communities? The answer may lie in building new and better partnerships between the public and private sectors. At the 2017 meeting of the International Business Leaders’ Advisory Council (IBLAC) in Shanghai, AIG’s CEO Brian Duperreault discussed how these alliances can empower governments to create cities of excellence. By creating partnerships for sustainable and shared development, governments, businesses and universities can help transform cities to better meet the emerging needs of their residents. With our experience in anticipating risks and promoting resilience, insurers like AIG can help cement these partnerships and successfully advance them.
Public-private partnerships (P3s) are long-term agreements between governments and businesses to develop public assets that can help cities build and manage infrastructure more efficiently. They aren’t a perfect solution for the growth challenges cities face, but they can be important vehicles for harnessing the resources of the private sector for public good. Innovative insurance solutions can help address some of the challenges these partnerships encounter. For example, while the contractor and the operator of an infrastructure P3 project may be the same, the lines can be blurry between where construction coverage ends and operational insurance begins.
To address this, we have created an end-to-end insurance policy for both phases of a P3. This can help cover the full spectrum of risks from the launch of a P3 project through to its conclusion, helping the P3 partners alleviate investor concerns, receive faster claims payments, and keep projects moving. For example, AIG insurance tailored to the goals of construction and operating needs is helping the Port Authority of New York & New Jersey, which operates LaGuardia Airport, expedite the airport’s reconstruction process.
Insurers like AIG can also offer our knowledge of risks to governments and universities to help improve urban sustainability. In Japan, AIG’s member companies partnered with Osaka’s government to establish the AIG Institute, a non-profit that advises the city’s businesses on pre-crisis planning and sustainable development. In another instance, through our relationships with Tongji University in Shanghai and Clemson University in the U.S., AIG has launched an international partnership to support scientific research and publication, safety and risk mitigation, and sustainability and resilience. The initiatives include education, training and sharing of ideas to build a more resilient global community.
The kinds of opportunities for insurers to activate partnerships supporting inclusive, sustainable development will vary by city. Understanding public opinion about each city’s needs and attitudes toward P3s can help tailor the approach to this structure. For example, AIG research indicates that Shanghai’s residents identify job opportunities and housing as critical areas for improvement. Shanghai is also threatened by climate change and natural disasters. AIG’s partnership with Clemson University has produced analytics that can model floods 50 to 100 times faster than previous models. By integrating insights from flood models into urban planning, cities can build more resilient infrastructure and housing stock to meet the needs of residents, which increases employment opportunities as well.
AIG supports the power of people and partnerships to achieve sustainable, inclusive growth. By partnering with individuals, businesses and governments around the world, we continue to provide insurance and insights to forge a stronger future. To learn more, read the full report to the Mayor of Shanghai and the council of 50 global corporate leaders.