Pandemic drives paradigm shift in digital

The coronavirus pandemic will force the insurance industry to embrace digital, according to research from the Cass Business School. It also suggests the pandemic has underlined the value of having a chief risk officer to navigate strategy and identify opportunities.

The rapid acceleration of COVID-19 has,argues the report, Risk, Strategy and Digi-Change and the Role of the CRO, brought about a wholescale change in working practices for insurers, with speed and efficacy of data increasingly important.

Authors Sarah Ruberry and Dr Cormac Brycr found that insurance organisations often prioritise inward-facing, prescriptive digital strategies to the detriment of an outward-facing integrated strategy to target upside risk.

The research, which was based on a survey and interviews across nine different-sized insurance companies, found however that one in three CROs were either not looking at digital change – the implementation of insurtech and other data-oriented digital initiatives – or not implementing it.

The authors recommend that insurance and reinsurance firms should focus on transforming the traditional perception of risk as the second line of defence into a value-identifying ‘second line of opportunity’. They also suggest firms need a CRO more than ever and that there should be a greater focus on realistic stress test and scenario planning that considers the possibility of a potential second COVID-19 outbreak and susceptibility to future pandemics.

Ruberry commented: “A year ago, the insurance industry would have dismissed the idea of a wholesale working-from-home model and new business not needing to be conducted in person.

“COVID-19 has created an opportunity and a paradigm shift and similarly, insurers should refocus their 'digi-change' lens.”

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