Is it time to step away from the comfort blanket of the traditional insurance market business model? This is one of the questions posed in a bold report launched by AXA Corporate Solutions and Airmic in June. Phil Wheeler takes a detailed look at the findings and asks what they mean for the future of insurance
As the recognition of the risk manager as a strategic business enabler continues to increase, it is clear that the insurance market must respond to the developing challenges of changing customer needs and risk profiles to provide solutions which are "fit for the future".
The research by AXA Corporate Solutions, conducted as part of Airmic's A Profession in Transformation project based on an in depth survey of its membership, highlighted a number of areas where there is an increased demand for the insurance market to adapt if it is to maintain its relevance to businesses.
In particular, it highlighted the need for the market to support risk managers with understanding and managing today's (and tomorrow's) more complex risks, not just through pure risk transfer products, but increasingly in terms of support and associated services. It is clear that the risks which provide the heaviest burden to customers are those which impact upon intangible assets, with reputational damage, cyber attack and loss of data all high on the list of exposures.
An analysis of future mitigation strategies showed that there is a preference to manage intangible risks in-house rather than transferring them to the insurance market, with a greater emphasis on reducing and retaining them. This is an extensive task for the majority of companies, particularly when the research also demonstrates there is a clear learning curve for a great number of risk managers when it comes to managing these "modern" risks.
It is therefore important that the industry recognises how it can fully support clients in this respect. The report demonstrates a call to action for all parties involved in the industry to fully support their clients with a refocused approach, evolving away from carriers who simply accept risk and pay claims to becoming true partners who want to work closely with clients to build tailored services that better meet the needs of their businesses.
At AXA Corporate Solutions, we recognise that for risks to intangible assets, traditional insurance will become less and less relevant. We also recognise that risk and insurance managers need support to better understand these new and challenging risks. It is clear from this survey that corporates are planning to reduce and retain these risks, and as a first step, insurers, brokers and risk manages must work together to develop and improve value-added services designed to mitigate and/or prevent losses.
It is also clear that a rapid development of services is required in terms of data, with the research highlighting a shift towards the extensive use of data analytics by risk managers within the next three years. Investment within their businesses currently seems to focus on analytics which will drive the business forward (e.g. sales) but as the value of risk management increases, it is predicted that the investment in risk management data will follow. Insurers and brokers need to maintain the pace of their current investments in this area, ultimately overcoming their legacy systems issues to enable them to fully support the ambitions of their customers.
There is an extensive need for strong partnerships between insurers, brokers and risk and insurance managers to help the industry move away from a transaction-driven model to a collaborative model that will proactively help clients to mitigate their losses, whichever area of the constantly evolving business they may arise from.
To download a copy of the full report please click here.
For further information regarding the report please contact Phil Wheeler firstname.lastname@example.org.