More than 50% of the world’s population lives in cities. By 2050, this figure may reach nearly 70%i, posing a challenge to city governments. How must cities innovate to support ever larger, more complex, and more connected communities? Part of the answer may be found 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 partnerships can empower governments to create cities of excellence. By creating partnerships for sustainable and shared development, governments, businesses and universities can help transform global cities to better meet the emerging needs of their residents. With our experience in anticipating risks and enabling resilience, insurers like AIG can help activate these partnerships and move them forward successfully.
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.ii 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 benefit. Innovative insurance solutions can help address some of the challenges these partnerships face. For example, while the contractor and the operator of an infrastructure P3 project may be the same entity, there can be blurry lines between where construction coverage ends and operational insurance begins. To address this, we have created an end-to-end insurance solution for both phases of a P3. An end-to-end policy can help cover the full spectrum of risks from the launch of a P3 project through to its conclusion, helping the P3 partners to alleviate investors’ concerns, receive faster claims payments, and keep projects moving on track. 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 and is overseeing its complete reconstruction, expedite the construction process.
Insurers like AIG can also offer our understanding of risks to governments and universities to help improve the sustainability of global cities. In Japan, member companies of AIG have partnered with the government of Osaka to establish the AIG Institute, a non-profit that advises businesses and municipalities in Osaka 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 academic-industry partnership to support scientific research and publication, safety and risk mitigation, and sustainability and resilience. Initiatives include education, training and cross-pollination 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 towards P3s can help tailor the application of this structure. For example, AIG proprietary research indicates that Shanghai’s residents see job opportunities and housing as critical areas for improvement. Shanghai also faces challenges from climate change and natural disasters. AIG’s partnership with Clemson University has enabled analytics that can model floods 50 - 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 of course, increases employment opportunities as well.
AIG supports the power of people and partnerships to achieve sustainable, inclusive growth. Partnering with individuals, businesses and governments around the world, we continue to provide insurance and insights to forge a more resilient future. Click here to see more AIG insights that can help you align your partnership with public interests in major cities around the world.
i “World’s population increasingly urban with more than half living in urban areas.” The United Nations, 10 Jul. 2014. http://www.un.org/en/development/desa/news/population/world-urbanization-prospects-2014.html. Accessed 10 Nov. 2017.
ii “Public private partnerships in the U.S.: The state of the market and the road ahead.” PwC, Nov. 2016. https://www.pwc.com/us/en/capital-projects-infrastructure/publications/assets/pwc-us-public-private-partnerships.pdf. Accessed 10 Nov. 2017.