The insurance industry and risk managers are poised to ensure the future - by Teresa Chan

the insurance industry and risk managers are poised to ensure the future

by Teresa Chan

What kind of phone did you have ten years ago, in 2010? Could it warn you of virus exposure, allow you to remotely secure your home, or enable a virtual underwriting of your business for property insurance? Within ten years, these capabilities will be obsolete and surpassed by virtually endless possibilities: selfdriving cars, private excursions into space, and even apps that predict and mitigate health problems in your future. Risk management professionals support the enterprises that will lead these advancements, and the insurance industry will be their partner in making it happen.

Insurers are always in the search for first-in-market innovations and versatile strategic solutions that can impact entire industries. Some of the key elements for success are a concerted corporate-wide effort, systematic outreach to clients and business partners to generate a pipeline, and critically, timeliness. While working in niche market development, I had the unique opportunity to launch the first personal and corporate identity theft products, build businesses for struggling communities, help secure financing for solar, wind, waste-to-energy, and biofuel projects, and create digital insurance platforms.

However, risk profiles constantly change and even ground-breaking solutions can quickly become obsolete. The fear of personal and corporate identity theft has been trivialized by the consequences of cyber-attack. As the reliance on and reliability of renewable energy grew, the responsibility of sustainability relative to environmental, social, and governance factors expanded beyond the clean energy producers who were insured. Traditional sales and marketing are no match for data analytics and machine learning. As evidenced by the pace at which technology has evolved over just the past 10 years, change takes place much faster now than it did before. As a result, risk management professionals and insurance providers must stay ahead of the curve by (1) increasing collaboration between stakeholders, including risk managers, providers, and intermediaries and (2) investing in human capital that is prepared to lead, facilitate, and foster innovation.

COVID-19’s reach is deeper in impact and broader in scope than anything we have experienced in modern times. As a result of the necessity for stakeholders to regroup and reposition themselves, there are opportunities to accelerate change and innovation together as we move forward.

Insurance providers should continue to deepen understanding of their insureds’ businesses and motivate them to be more tactically prepared to weather seemingly inevitable future COVID-like situations.

The upstream and downstream reliance of businesses on each other has been magnified, and it is an opportune time to map out these relationships for risk transfer opportunities. Risk managers and insurance providers can strategically benefit from this exercise.

Financial markets may seek clients who can demonstrate more elastic business and risk management plans that could be supported by insurers. Perhaps a policy can be constructed to help small businesses manage unexpected operational pivots under specific conditions, like those who retrofitted their manufacturing facilities to produce alternative products.

Insurance and other intermediaries with consulting practices can support risk managers with advisory services that complement new strategies in risk management. They can facilitate increased collaboration with carriers to produce new risk transfer solutions.

Since business interruption coverage has made the headlines, more people understand it better now than before, whether or not they’re business owners. It highlights the gaps in knowledge about how insurance works, so enabling broader education about insurance will help elevate the critical role of insurance in every facet of life and industry.

Insurance is being transformed by disruptive forces like new technology, climate change, and abundant data. The industry embraces disruption, but the accelerated pace of change creates a human capital challenge. Insurance providers are more actively involved than ever in attracting and nurturing thought leaders who want to understand the business at a holistic level and be able to work collaboratively to achieve growth through new or improved products and services. Current circumstances yield even more opportunity for innovation than ever before, making modern educational and informational options a timely resource.

Consider this: The U.S. Bureau of Labor Statistics projects that as much as half of the insurance workforce will begin to retire in 10-15 years. An estimated 1.7 megabytes of data are generated each second of every day for every person, according to market intelligence firm IDC. And last year, investments in InsurTech businesses exceeded expectations with investors committing more than $6 billion, according to Willis Towers Watson. That’s more than a 60% increase in funding over the previous year. What does this mean? It means that the industry needs a fresh crop of leaders and professionals who are tech-savvy, curious, and resourceful. It means that businesses have confidence in the insurance industry as game changers and not as insulated, static institutions. Ultimately, it means that the next generation of insurance professionals can be the ones to ideate and implement broad shifts in business strategies. Risk managers can tap these new resources as they emerge, eager to identify new markets, satisfy new customer needs and provide higher levels of service.

Through the optimization of risk and insurance communities’ relationships complemented with crossdisciplinary education, there will be a new level of transparency available to more risk and insurance professionals. Those who have a deep understanding of how all of the multidisciplinary, cross-functional units within an insurance enterprise work together will be able to achieve a better alignment of interests between insureds and providers.

The confluence of professional studies with scholar-professionals in academia will fast-track the experiential learning process and help facilitate innovation while complementing in-house corporate learning and development initiatives.

New insurance leaders will eventually transform insurance business management, blending advanced industry knowledge, strategic and operational expertise, and an appetite for turning disruption into profitable innovations. They will have a unique perspective on the value of networking and the integration of these relationships to deliver value-added solutions for their clients. This new level of collaboration will provide extensive opportunities for risk managers and insurance providers to ensure the future together.

author

Teresa Chan

Columbia University School of Professional Studies Academic Director, Master of Professional Studies in Insurance Management

With over 27 years of experience in the insurance industry, Teresa Chan is a recognized leader and innovator in the areas of renewable and alternative energy, niche market development, and policy drafting. Throughout her career, she has tackled emerging issues by building and leading multi-disciplinary teams and delivering client-focused solutions.

Most recently, Chan served as Business Manager for an insurtech business incubator supported by Willis Towers Watson. Previously, Chan spent 22 years at AIG, where she served as both Senior Vice President of AIG Energy Warranty and Director of Corporate Product Development.

Chan earned her J.D. from Fordham University and her B.S. in Operations Research from the School of Engineering and Applied Science at Columbia University. She has been recognized by publications including “25 Women to Watch” in Business Insurance and “Top Insurance Women” in ReActions Magazine.