Is the growing importance of environmental, social and governance (ESG) goals, digitalisation and data-driven technology a catalyst for transformation, or a contributor to failure?
The recent conference titled ‘
Insurance reimagined: Are we ready for the new realities and uncertainties?’ considered these trends and their impact on the insurance industry and insurance guarantee schemes. The 1.5-day hybrid conference in Kuala Lumpur was hosted by PIDM in conjunction with the
International Forum of Insurance Guarantee Schemes (IFIGS)’s Annual General Meeting (AGM) 2022.
Afiza Abdullah, Executive Vice President, PIDM, and Chair of IFIGS, said in her opening address that the intensifying disruptive forces in recent years have contributed or accelerated the failure of insurers in different parts of the world.
“Regardless why and how an insurer fails, insurance guarantee schemes could provide the most needed protection to the policyholders or beneficiaries when an insurer is unable to fulfil its insurance contract obligations. The establishment of insurance guarantee schemes ensures institutionalisation rather than socialisation of default risk, and contribute to the consumer confidence in the financial system,” said Afiza.
Invited speakers started off the conference with exciting sharing from the different lens of multiple stakeholders, covering diverse topics on risks, challenges, opportunities and outlooks in the new landscape underpinned by climate change, lifestyle change, digitalisation and technologically-driven innovations. The conference also discussed insurance failure cases, and closed with a panel discussion participated by several insurance guarantee schemes from different regions, moderated by PIDM, on how insurance guarantee schemes can reimagine and recalibrate their roles and readiness in the new and rapidly evolving operating environment.
The following are some of the key insights and discussion points from the conference:
- There is an expected shift in the role of the insurance industry, from risk transfer to risk prevention, supported by technological innovations. To facilitate the shift, collaborative readiness is proposed as the way forward, especially in the transition to risk prevention mechanisms for financial stability and consumer protection.
- The recent failures of insurers point to common causes that remain unchanged in spite of better business and regulatory environments. These include issues relating to corporate governance, unanchored rapid growth, complexities in organisational structures and adequacy of regulatory oversight. However, the disruptive forces, particularly climate change, have added another dimension which may lead to faster time to failure and larger losses, and spur more active merger and acquisition activities.
- By understanding the trends and their impact, insurance guarantee schemes and resolution authorities can better prepare for failures and deliberate on future roles to play. Amongst key aspects of preparedness that were considered include enhanced crisis communication framework, close coordination and cooperation with various stakeholders, early information access and intervention, testing and simulation exercises.
More than 250 participants from 34 jurisdictions, including officials from the Malaysian Ministry of Finance and Bank Negara Malaysia, attended the conference.
IFIGS is an international non-profit network founded in 2013 for insurance guarantee schemes for life and non-life insurance. It facilitates and promotes international collaboration among insurance guarantee schemes and other stakeholder organisations that contribute to the aim of policyholders’ protection. It has 30 members in 2022.
Panellists discuss the considerations for resolution authorities to be better prepared for resolving failures in new realities in a session titled 'A clear and present danger - Same endgame, different paths?'.
From left:
- Afiza Abdullah, Executive Vice President, PIDM and Chairman, IFIGS
- Paul Petrelli, President and Chief Executive Officer, Assuris
- Fauzi Ichsan, Chairman of the Board, Indonesia Financial Group
- Moses Kiptoon, Deputy Director, Insurance Services - Insurance Risk Monitoring, Policyholders Compensation Fund, Kenya
- Miguel Ángel Cabo, Director of Liquidation and Recovery of Insurers, Consorcio de Compensación de Seguros