Don Canning, vice president for SunGard’s insurance business, said, “The effects of market volatility and global regulations, such as Solvency II, are driving multi-national insurance carriers to increase their focus on controlling liability risks and improving transparency and stakeholder confidence. Supervisory focus on risk and economic capital management underscores the importance of embedding strong risk management principles throughout an enterprise and moving beyond just "tick-the-box" compliance. Carriers must increase transparency around business workflows, and improve auditability across the enterprise. Beyond underwriting, life insurers are increasingly using analytics and predictive modeling to help create opportunities for increased sales and improved efficiency.”
SunGard has identified ten trends shaping the North American insurance industry:
1. NAIC's ORSA*, inspired by Europe’s Solvency II, is placing greater emphasis on data and process governance, risk transparency and compliance, driving the need for data quality and consolidation that enhanced analytics can leverage.
2. Actuaries need faster, more efficient modeling and analyses to help improve risk management, requiring robust, grid-enabled and scalable technology environments.
3. The move towards cross-territory supervision of insurance groups calls for a holistic approach to risk management across subsidiaries and holding companies, and for platforms that can support risk visibility across states, territories and provinces, and lines of business.
4. U.S. carriers are looking to centralize information from disparate and traditionally separate valuation and projection modeling systems to achieve consistent views of risk.
5. Ratings agencies are developing enterprise risk management (ERM) assessments and embedding them into their evaluation process, which is placing more pressure on publicly traded insurance carriers to embed risk management intelligence throughout the organization.
6. Increasing regulatory requirements and high market volatility are driving insurers to generate real-time investment and accounting information.
7. Insurers are using business intelligence to leverage “big data” to help them estimate claims, assets, credit and market data, and gain deeper insights across networks of producers, policy holders and operations.
8. Analytic and predictive modeling techniques are creating opportunities for increased sales, as well as improved efficiency and expanded service capabilities.
9. Growing demand for highly specialized actuaries, increasingly at the heart of initiatives to improve risk management, is creating more competition among insurers vying for the best and brightest talent.
10. Volatility and the need for more frequent risk reporting require carriers to consider a pay-as-you-go business model in the cloud in order to scale up computing power rapidly and cost effectively.
“Enterprise risk management continues to challenge North American insurers,” said CEB TowerGroup research director Sam Stuckal. “Financial risks are increasing due to greater globalization and interconnectedness of financial markets. Insurers will seek ‘best in breed’ risk technology solutions that integrate well with existing tools and treat risk uniformly across product development, financial reporting and risk mitigation.”
* National Association of Insurance Commissioners (NAIC); Own Risk and Solvency Assessment (ORSA)
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