‘Risks Drawing Focus on Insurance Capacity as Business Safety Net’

Insurance experts have said that increasing frequency and severity of local and global risks, especially emerging risks like climate change, and cybercrime is drawing focus on the insurance industry’s capacity and readiness to react as financial safety nets for businesses.

According to them, in recent times, most insurers are realising that reacting to risks may not be good enough and are undertaking transformation efforts aimed at preventing losses from happening in the first place.

The experts harp on risk preventive mechanism as the preferred way to run insurance firms.

Nigeria’s, National Insurance Commission (NAICOM) often emphases on what it tagged, Enterprise Risk Management mechanism among insurers as a way of preventing risk occurrence.

The commissioner for insurance, Sunday Thomas, recently released a framework to serve as a guideline on Takaful insurers and reinsurers.

The commission said in doing this, it intended to establish minimum risk management standards for Takaful and retakaful operators.

In the new business year, finance experts said the severity of emerging risks in the area of climatic change and cyber crime is most like going to serve as acid test for value of insurance as risk bearing hob of every business.

Deloitte in its outlook for insurance sector in 2024 said this shift to a more customer-centric business model will likely require advanced technology adoption and modification of company culture to help minimise siloed interactions, enhance collaboration among employees, and increase accessibility of customer data but said that skill sets may need to be augmented.

“Merger and acquisition (M&A) activity has been on a decline since Q2 2022 due mainly to macroeconomic factors. However, as increases in interest rates and inflation ease, pent-up activity may drive an upsurge in deals later in 2024. Insurance technology companies (InsurTechs) remain front and center of acquisition activity as carriers increasingly look to these capabilities for point solutions across the value chain to power transformation efforts, “it said.

According to Deloitte, fundamental mission underlying much of this change is that the industry’s role is pivoting to that of a sustainability ambassador, influencing and propelling purpose-driven decisions and strategies of clients across industries to create a better workplace, marketplace.

It said insurers are transforming to achieve customer-centricity and elevate purpose.