Re/insurers investing more in risk management
Most re/insurers are now managing capital using metric-based frameworks and are publishing more about their risk management targets than ever before.
That is one of the key conclusions of a report by Guy Carpenter examining the risk management practices and policies of 67 insurance and reinsurance companies located in Europe, the US, Bermuda, and Asia-Pacific.
Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review revealed that capital market, legislative, and regulatory influences, such as the approaching implementation of Solvency II, are also expected to further compel company managements to better recognise and analyse the risks of their enterprises.
“External demands such as regulatory developments, the ongoing sovereign bond crisis, and global natural catastrophe events are again showing how critical it is for insurance and reinsurance companies to effectively assess their corporate risks,” said Markus Mueller, senior vice president at Guy Carpenter.
“With a thorough understanding of enterprise-wide risk and the integration of this knowledge into the business decision-making process, companies will be better prepared to respond to internal and external questions relating to risk and capital.”
Mueller added: “The improvement in disclosures observed in the past three years shows that a rapid evolution is underway. A more robust investment in ERM provides companies and their stakeholders with a better understanding of risk strategy in order to drive capital efficiencies and maximize stable risk-adjusted returns as part of an articulated business plan.”
