The way we live and do business has changed considerably over the past few years, especially post the pandemic outbreak. With new, innovative technologies driving rapid change in the insurance sector, we would all probably agree that in 5 years from now, insurance will transform radically from what we perceive currently. Though many factors are poised to drive change, the speed at which both the adoption of the technology and analytics has progressed in the insurance sector is faster than anyone would have prophesied.
Also, as the insurance industry adapts to the new normal, the ‘Risk Function’ must keep pace, failing which businesses can incur huge losses and lose market value. At the same time, insurers must focus on effectively managing insurance risks by ramping up their risk management expertise and transforming themselves digitally to stay relevant and recover lost shares.
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However, when it comes to managing insurance risks, it has become increasingly apparent that having a robust organization-wide risk culture is crucial to driving long-term success. To enhance insurance risk management, insurance service providers are now focusing on improving data governance, data management, and productivity. As a result, there has been an intensified effort across the industry to review and assess risk management processes and implement changes to proactively manage the risk culture.
To cut through the noise and identify factors driving change, Quantzig’s risk analytics experts conducted a detailed industry analysis to identify risks and analyze factors that will underpin the drivers of future change. A detailed analysis of risk factors helped us identify five operational trends that will transform the insurance sector over the next five years:
- Changing customer expectations
- The proliferation of new technologies
- Elimination of biases to drive better risk decisions
- The emergence of non-financial risks
- Strong focus on savings
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Managing Insurance Risks: Three Focus Areas when Implementing Risk Analytics in Insurance
1. Speed and Accuracy of Insights
Identifying and managing insurance risks by leveraging risk analytics is crucial in the current scenario as it enables businesses to save time and resources by automating data analysis and insight generation. With advanced predictive insights, insurers can continually learn and evolve to identify emerging issues and trends. This, in turn, will help insurance companies to leverage customer data and supplement it with a wider range of global intelligence sources.
2. Organization-Wide, Unified View of Risk
The growing need to establish a single version of the truth across all business segments will enable insurance service providers to access a consistent view of risk in any segment. The use of advanced risk analytics will also enable businesses to drill down on issues of relevance including, customer behavior, concentrations of risks, and other technical deviations. This ability will, in turn, enable the insurers to fully incorporate risk, as well as factors impacting growth, throughout its decision-making process.
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3. Alignment to the Business Strategy, Rather than Compliance
As business activities become increasingly automated, the information gathered through risk analytics will help insurers to understand and analyze the impacts of different risk scenarios driving strategic decision-making.
Notably, managing insurance risks using advanced risk management analytics will help drive change and enhance the skillsets needed to identify and manage risks. Advanced risks analytics will also provide a forward-facing view of emerging risks, helping insurers to review the potential risks and understand the key drivers of change.