Insurers not immune to risk management

Insurers may deal in risk, but they may not be taking “enterprise risk management” to heart in their own companies, and it is a situation that will have to change soon. Neil Parkinson, partner at KPMG LLP, told guests at a recent Canadian Insurance Accountants Association seminar that insurers need to take their own advice and implement good risk management programs throughout their companies, especially in light of several proposals for regulating business practices in p&c insurance.

In 1999 the Office of the Superintendent of Financial Services (OSFI) devised a supervisory framework which Parkinson admits he prefers over the exhaustive, time consuming “Program for Assessing Regulatory Compliance” (PARC) and “Sound Business and Financial Planning” (SBFP) systems used for life companies. Similar regulatory systems to PARC and SBFP have been proposed for p&c insurers. In light of a January 2000 review by the Canadian Deposit Insurance Corporation (CDIC), which came down against systems like PARC that emphasize risk “checklists”, he hopes “the shape of things to come will look more like the OSFI framework than what’s in the SBFP”.