Trust-building empowers strategies for sustainable growth
By Mary Trussell, Partner, KPMG in the UK
“What are the fundamental characteristics required by our firm to survive and thrive over the next decade?” That’s the recurrent question that my colleagues and I hear from our clients across geographies and insurance lines.
Michael J. Morrissey, IIS President and CEO
Keynote - 13th Asia CEO Insurance Summit, March 21, 2013
When I am asked about a The new World Insurance Order, I am reminded that we insurers are not alone in this turbulent economic environment. Many, if not most industries, also uneasily face a truly new world. Why?
The International Insurance Society’s 48th Annual Seminar in Rio de Janeiro June 17-20, 2012 focused on emerging insurance markets moving toward a more common approach to market structure, methods and regulation. The launch of the United Nations Environment Programme Financial Initiative Principles for Sustainable Insurance at the seminar acknowledged the key role insurance plays in sustainable economic development. Improved understanding of economic and environmental risks allows insurers to better manage existing risks and to accept a wider range of risks as insurable. The 49th Annual Seminar in Seoul, Korea June 16-19, 2013 will address a range of business development opportunities and challenges to capitalize on some key global risk trends, e.g., ageing, low interest rates, social media Solvency II, attracting talent. Both seminars represent unique opportunities to learn about and discuss the major insurance industry issues of the day. The annual seminars are supported the rest of the year by IIS’s rapidly developing website with proprietary member content and opportunities for member-to-member communication. We hope you will make it a priority to attend the Seoul seminar in June and make use of the website the rest of the year.
Peking University China
Understanding the interplay among social, economic, and environmental crises is key to understanding their impacts on the insurance industry and is therefore the key to developing innovative responses that will promote the long-term steady growth of the insurance industry.
Much of the discussion about environmental, climate, social and governance issues has been about what costs private business should assume to address them - yet another obstacle to business success. More recently, the conversation has been shifting to “sustainable development.” This concept recognizes that some business activities create “externalities,” i.e., social costs not covered in product prices (e.g., pollution) and/or may negatively influence the potential for future generations to have business opportunities (e.g., carbon emission).
We live in a world of continuing crisis and upheaval in the physical world, economics, politics and social infrastructure – a world of threat and uncertainty. The insurance industry thrives on managing risk and uncertainty, but only if it can use its skills to price the uncertainty. The International Insurance Society’s 47th Annual Seminar in Toronto, June 19-22, 2011 provided many examples of opportunities for the insurance industry to leverage today’s uncertainties into new business opportunities. Most of the seminar content is available for review on the IIS website.
Because of the long term nature of insurance contracts, pricing, reserving and investment policy are very sensitive to inflation trends and experience. We are currently living in a low and relatively stable inflation environment. The industry is generally able to adapt to inflation changes that occur in gradual cycles with limited peaks and valleys. It is the sudden movements that create the problems. Although the industry has survived through rapid movements and extremes in the past, most of the current generation of insurance people do not have experience with operating under high inflation conditions. As we anticipate an eventual economic recovery, we should expect a return of higher inflation rates. Depending on the progress of recovery, and government stimulus actions, we need to be prepared for a range of higher inflationary scenarios.
1. Has ERM been successful in better management of risk on an integrated basis through companies and company groups?
2. How has this changed the role of reinsurance in companies? Is it used effectively as a capital management tool?
3. Have organizational structures been changed to assure effective communication and management of risk information?
4. Are insurers and reinsurers making effective use of capital markets to supplement industry capital in risk bearing?
5. Will integrated risk and capital management expand the market potential for a broader range of now insurable risks globally? How?
Insurers have a clear vision of how enterprise risk management (ERM) will add value to their organizations but face business challenges in progressing toward that goal, according to Towers Watson's Seventh Biennial Global ERM Survey, released in November.more articles