Insurance outlook for 2018: what are risk managers focusing on?
Predicting the future has always been a topic under much scrutiny and debate, and the insurance industry thrives on trying to see past the now and protect against what could be. With this in mind, risk managers from the insurance and asset management communities came together at RiskMinds Insurance, to talk about the future and their role in creating and protecting it. And one question seemed to be on everyone’s minds this year: how is the business model of insurance companies going to evolve?
Last week, experts came together for three days to discuss what is putting pressure on traditional insurance business models, and what strategies were being employed to take the strain off. Big changes have already risen – from notable mergers, to global geopolitical changes and digitalisation. The insurance industry seems to be wide open to changes and new opportunities.
It has become commonplace to talk about disrupting the business model, and technological advancements are at the heart of this change. It is widely accepted now that partnerships between traditional insurance companies and disrupters are the way forward. As disruption and innovation makes bigger and bigger waves in the industry, you should adapt to survive.
Even though there appears to be a new InsurTech emerging every day, these insurance start-ups don't seem to have made a big impact alone.
Even with this, there seemed to be quite a peaceful, smooth sailing feeling emanating from risk managers in insurance, because, so far, the big machines of disruption (think the Ubers or Amazons) have had their sights set on other markets. The insurance industry hasn’t yet suffered such a shock to the system, and how long this will last was a key point of discussion.
Indeed, the community of insurers at RiskMinds Insurance seemed to be very optimistic about the future. Even though there appears to be a new InsurTech emerging every day, these insurance start-ups don't seem to have made a big impact alone. Traditional insurers are very open to cooperating to build solid future-proof business models.
On the other hand, vast economic changes and a continuous low volatility environment is seeming to get the best of the insurance world. During the Capital, Liquidity and Investment Summit, we reviewed the adjustments and protections for risk margins and capital positions that insurers have been making in the post Solvency II implementation era. Finding the right balance between capital and earnings has proved to be trickier than ever, and during the summit we discussed the how crucial is it to build a framework that ensures consistency in capital and eliminates discrepancies in earnings.
CROs of large insurance companies came together to find solutions to issues that have been challenging insurers on every continent.
Another lively discussion was held around the question of what we can all do to increase diversity in our organisation for the benefit of more inclusive leadership and better decision making. Women are making up a a greater portion of the work force than ever before, and business are starting to recognise the improved returns from innovations created by diverse teams.
Of course, one other issue that can’t be escaped (no matter what field of expertise you might be in) is cyber risk. This has topped the priority agendas for CROs and IT professionals alike, but the invaluable insight we took away from the event regarding how to protect our businesses from cyber-attacks was looking at how we train our employees. Time and time again, hackers have breached security of countless organizations, not by employing the most intricate of coding tools, but by exploiting the vulnerabilities that we unknowingly create whilst we go about our day to day. During a live cyber hack session, we learnt that there are easy ways to access anyone’s computer if they are not aware and following the right security protocols. This eye-opening session put things into perspective for the audience, and gave them food for thought for when they go back to their offices.
RiskMinds Insurance this year, we were overwhelmed by the record numbers of CROs who traveled from across the world to join the discussion with the aim to make projections about the future of the industry. It was impressive to witness such a strong sense of collaboration throughout across the three days, and it was remarkable to listen to CROs of large insurance companies come together to find solutions to issues that have been challenging insurers on every continent.
This leaves us with an optimistic outlook for the insurance industry, and for the risk management sector alike.