In order to comply with higher prudential standards
Insurers are channeling more resources into risk management and mitigation technologies for cost management over the next one year, according to a latest survey conducted by IDC Financial Insights.
The April 2011 survey asked Asian insurers on the risk mitigation techniques that their organisations will be focusing on in the next 12 months, since Asian insurance regulators have put forth a series of preemptive reforms to tighten the management of insurers.
The technologies include tackling issues around their respective countries’ regulatory mandates, determining if they should prepare for international mandates like Solvency II and best practices from International Financial Reporting Standards (IFRS), and, developing risk-based performance matrices that are reflective of the long-tenured risk profile of insurance policies.
The survey reveals that insurers are demonstrating proactive risk stewardship and strengthening their ability to comply with higher prudential standards.
To better evaluate and mitigate risk for risk regulatory compliance, IDC Financial Insights observes that insurers understand the need to astutely manage their personal risk profile as even international markets have also grown increasingly entwined and riskier.
There is also increased pressure from internal and external stakeholders for management to demonstrate better awareness, oversight, and controls around risk.
The survey has placed highest priority to ensuring compliance to new regulatory and accounting framework, such as Solvency II and international best practices, following which offering risk training for internal executives has received the most priority.
The insurers have also accredited priority to tackling internal agent through education, perimeter defence technology including firewalls, email scanning, ID access, and penalty enforcement, among other risk management techniques.
IDC Financial Insights said having one’s risk management house in order would minimise the risks of security breaches and fraudulent activities from occurring, and help arrest instantaneous revenue loss as well as reputational ramifications, loss of confidence from current and potential customers, and potential impact from legal liabilities.
IDC has cited that HSBC Insurance has joined with IBM to create a data management and business analytics offering, since European firms have to implement Solvency II’s economic risk management standards by December 2012.
The application would produce fact-based insights and enables the insurers to efficiently manage all key regulatory information and associated reporting.