primary methodology by 65% of the largest insurers, compared to 50% of mid-size
and 20% of smaller insurance companies.
Economic capital is also used much more
often as a primary methodology by the
largest insurers (71%) than by mid-size
(31%) or small insurers (33%).
In contrast, value at risk is more often a
primary methodology at small insurance
companies (60%) than at mid-size (31%)
or large companies (44%). Claims ratio
analysis is also more often a primary methodology at small insurers (75%) than at
mid-size (46%) or large companies (56%).
Regardless, most — if not all — small,
mid-size and large companies are incorporating new technologies into their
repertoire. Artificial intelligence (AI) and
risk analytic technologies are expected to
enhance pricing and underwriting capabilities, thereby improving all aspects related to risk assessment.
The risks on most radars
While there are countless risks on insurance companies’ radar, when asked which
three risks they believed would increase
the most in importance for their institution over the next two years, there was a
broad consensus: cybersecurity.
Cybersecurity was named by 67%
of respondents as one of the three
risk types that would increase the most in
importance, including 40% who named it
as number one — far more than any other
Strategic (27%, with 12% naming it as
number one) was the risk type named
next often after cybersecurity. “The
heightened focus on strategic risk is
consistent with the current uncertainty
and unevenness in the global business environment and markets,” reads
Regulatory/compliance (25%) was
Big data to the rescue
named third most often among the top
three risk types, although this was down
from 36% in the prior survey. “While the
financial services industry must com-
ply with extensive regulatory require-
ments, the pace of regulatory change has
abated in the current environment,” the
Financial institutions are seeing a
new wave of risks threaten their horizon.
To counter their potential damage, big
data will have to be a prominent factor
in any risk assessment equation.
Survey respondents indicated cloud
computing, machine learning and business decision modeling tools, among
other emerging technologies, are currently being used, but many more indi-cated that they are planning to use them
-William “Bubba” Ryan, CEO
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