Compliance challenges and new liabilities
Businesses are entering a period of policy and regulatory change as the world steps up its efforts to combat global warming. Plus, the impact of the pandemic has also led to product innovation, with changes in policy wording.
FAnews spoke to Jane March, CEO of Guy Carpenter Africa and Teri Solomon, FINPRO Practice Leader at Marsh Africa about cover going forward, the reinsurance market, compliance challenges and new liabilities.
Cover going forward
“We are seeing an emergence of risks that are becoming viewed as uninsurable in traditional markets e.g., pandemic. The initial response from insurers is to remove these risks and over time, brokers, the industry and the public sector strive to plug the insurance gap,” said March.
Innovation, according to March, does not happen immediately, but new solutions are developed over time.
Terms and conditions of coverage
When looking at the reinsurance market and the impact on risk managers, D&Os and broker partners, March said, “The reinsurance markets are pushing to increase premiums and are looking at terms and conditions of coverage closely.”
“From a country perspective, the South African COVID losses were significant, and this has been followed by the riots. So, reinsurers are looking at the overall profitability of the South African book, which will put upward pressure on pricing well into 2022, and probably 2023 as well. From a global perspective, there is a lot of reinsurance capacity available, which does create competition that can benefit buyers,” continued March.
Compliance challenges and liabilities
In terms of new compliance challenges and liabilities Solomon said, “The pandemic, no doubt, has changed the way companies will operate in the future. Distributed workforces will necessitate new Work From Home (WFH) guidelines, whilst ensuring full compliance with the plethora of existing and new regulation affecting the insurance industry. The compliance risks emanating from this new normal are complex and are going to require a fundamental shift from pure rules-based compliance to one where flexible and ethical decision making will be needed.”
Some of the compliance challenges, according to Solomon, will include:
- Remote oversight of staff;
- New ways of measuring productivity;
- A massive focus on fraud and fraud prevention;
- Implementation and communication around vaccine mandates;
- Digital contracts and electronic signatures; and
- The remote filing of data.
“The increased reliance on data will also require focussed IT compliance skills, whilst those businesses that do physically return to the office will need to focus on reconfiguration of the offices to align with mandated safe working conditions. The focus on Environmental, Social and Corporate Governance (ESG) will also usher in a new set of compliance challenges as stakeholders focus on environmental, social and governance criteria,” added Solomon.
Risk management and future disruptions
“COVID-19 was, no doubt, a catalyst for reimagining the way we live and work. This Black Swan event ushered in some crucial learnings for risk managers, the majority of whom were caught off guard by how one single root cause could affect absolutely every aspect of their businesses,” said Solomon.
“Risk managers must ensure that their risk management frameworks and their Business Continuity plans are living agile documents, capable of real time change. The focus must also address both the short-term and long-term effects of a Black Swan event, as COVID has shown us just how long and far reaching such an event be,” she continued.
“Risk managers must also put people first. The economy and health are interlinked, and the more companies are prepared to look after the mental and physical wellbeing of their employees following a Black Swan event, the better,” she added.
“Finally, think boldly, be imaginative and have no limits when interrogating the “what if’s and don’t know’s” within a business,” concluded Solomon.
Writer’s Thoughts:
The pandemic, no doubt, has changed the way companies will operate in the future. Other than those already mentioned, do you believe a new set of challenges will be ushered in, in the near future? Please comment below, interact with us on twitter at @fanews_online or email me your thoughts [email protected].
