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Prepare for change, Airmic urges the insurance industry

The insurance industry will have to rethink its business model to prosper and meet its clients' needs in the new digital age. That was the message given by Airmic at a series of events organised by the Chartered Insurance Institute for its members. Mark Baylis reports.

CEO John Ludlow and his deputy Julia Graham have between them covered four CII Professional Focus events - in London, Dunblane, Bristol and Birmingham - and there are two more to come in Ipswich and Huddersfield. The talks entitled 'Transformation of the Profession in the Digital Age', apply the findings of Airmic's ground-breaking research Roads to Revolution specifically to the way insurance is conducted. And they represent a call to action.

John Ludlow sees that insurance has been a "laggard in terms of change" but believes there will soon be nowhere for the industry to hide as digital developments like AI and Blockchain transform the business landscape. Each firm has to ask, is it fit for what is about to hit it. "If you're comfortable with where you are today, you're probably not fit for the future," he says.

The presentations are intended to help the audience appreciate the expectations of the modern risk and insurance professional and to provide a foundation for developing closer co-operation between risk and insurance suppliers and buyers. The Professional Focus 2018 series is the CII's CPD programme, part of its aim being to influence cultural behaviours and raise professional standards.

Lessons from Roads to Revolution

Using as a foundation the series of thought leadership papers published by Airmic: Roads to Ruin, Roads to Resilience and most recently, Roads to Revolution, John Ludlow CEO and Julia Graham his deputy, have focused on reasons for corporate failure and success and how organisations and especially the insurance sector, are facing the impact of digital transformation.

Roads to Ruin (2011) and Roads to Resilience (2014) were ground-breaking in their day and are still relevant as long as they are read through the prism of recent developments in the use of data, says Ludlow. That is why Roads to Revolution (2018) is so important. It provides an essential update by taking into account digital developments, where technology is to a large extent driving business priorities, strategy and vulnerabilities. 

Applying these lessons to the insurance industry, he asked the audience whether they personally or their firms had the necessary skills. Do they have a risk management glass ceiling? How well-honed is their risk radar.

"We're in a much more competitive, fast-paced world," he said. "If you can embrace change and surf the wave you can grow and prosper." Although some underwriting and back room jobs will disappear, they will be replaced by other, new types of employment.

He cited the example of his former employer IHG, which completely re-engineered its business so that, for example, it no longer owns its own hotels. Its share price rocketed, and it now employs many more people than before.

"Insurance needs to become more strategic relationship-based"

Insurance, he said, needs to become less transactional and more strategic relationship-based - an experience as well as a product. There is an opportunity to provide customers with a service in a more efficient, more relevant way and at a better price.

Turning to risk managers, Julia Graham said in her latest talk: "the professional future is bright if we raise our professional game and embrace change and become business partners not just back office technical experts. The profession faces job disruption and we need to understand what this disruption means for our knowledge, skills and continuous professional development. We all need to get 'fit for the future' and the education programmes of the CII and Airmic are being designed to address these member needs - individual and corporate." 

The presentations so far have gone down well with CII members and stimulated a great deal of discussion. The debate has a long way to run, as the risk transfer priorities of Airmic members continue to move away from the traditional function of protecting property and other tangible assets.