Tough decisions ahead for insurers: Deloitte & Touche

By Canadian Underwriter | January 9, 2002 | Last updated on October 30, 2024
1 min read

As 2002 gets underway, insurers will be faced with increasingly tougher decisions on risk, says consulting firm Deloitte & Touche. In its “Top Ten Global Insurance Trends”, the firm predicts insurers facing increasingly unpredictable and global catastrophes, will have to look carefully at policy exclusions, sector coverage, pricing risk and the adoption of new underwriting skills.”The recent terrorist attacks, combined with natural and man-made disasters, have put extreme pressure on the insurance industry’s capital, raising questions as to how insurers will meet these new challenges,” says Owen Ryan, managing partner of the firm’s national insurance practice.Deloitte & Touche expects insurers will have to look at new “fee-based” sources for income as investment gains dry up. And insurers may also be looking a new “synthetic” risk products, such as funding agreements, credit risk derivatives, enhanced yield annuities, etc. New tools for assessing risk will also be key moving ahead.The sum of these changes will be for insurers to pay close attention to where they place capital and their levels of exposure. Insurers will have to look at their own risk management practices, and to go above and beyond regulatory requirements. “Many insurers’ compliance departments have operated to meet only minimum standards set by the regulator, rather than living the rules,” the study suggests. “This will change in 2002 and beyond, as insurance firms integrate compliance into the culture of their business, buttressing investor and consumer confidence and further aiding the “flight to quality” seen last year.”

Canadian Underwriter