The unpredictable global economy, characterized by higher interest rates, stricter lending standards, and increased inflation, has compelled insurance companies to exercise greater due diligence, particularly during mergers and acquisitions (M&A) and business planning processes.
Speaking to IB, Tanja Lumpp (pictured), managing director of global risk and benefits at IMA Financial Group, said that it’s the ever-changing nature of risk within the business environment that means insurers have to stay vigilant and adaptable in 2024.
“There have been some major events and shifts in the global landscape over the past several years,” she told IB. “These developments have introduced numerous challenges but also a wealth of opportunities, particularly for the insurance industry and for IMA as a whole.”
Geopolitical conflicts have complicated global risk management. Businesses are still relearning how to navigate global supply chains, as evidenced by the production shortages during the COVID-19 pandemic.
“It just comes down to being proactive and also being reactive and having the resources that we have as an organization to make sure that they’re in good hands and feel like they can rely on us for that guidance,” said Lumpp.
Climate change is another significant factor shaping the global risk environment, with extreme weather events such as wildfires, hurricanes and floods driving up property insurance rates and causing insurers and reinsurers to scramble to cover catastrophic losses. This, in turn, has put financial strain on insurers and led to stricter regulations and requirements for covering environmental risks.
“Sustainability is another key player,” Lumpp said. “Our role as insurance advisors has shifted quite a bit. We’re definitely being asked to fill in the role of a sustainability ambassador for a lot of our clients.
“Businesses are really coming to terms with the norm of the economic environment and the shocks that are definitely more frequent and more unpredictable… Both from global risk and global benefits perspectives, it’s impacting the bottom line for companies. At the end of the day, there is a lot of uncertainty.”
This increased scrutiny reflects the need to ensure comprehensive coverage and adequate risk management measures are in place, with Lumpp believing that these stricter requirements are likely to persist.
“We have been seeing underwriting take multiple weeks to obtain approvals for some of those travel destinations,” she said. “For the foreseeable future, I see these requirements only getting more stringent. I don’t see them loosening up.”
And, in response to the evolving risk landscape, IMA has adapted its insurance products to meet the emerging needs of businesses. Lumpp told IB that one recent adaptation involved working with clients to build more intelligence-based travel management programs, utilizing artificial intelligence to optimize travel and improve security.
“This allows the employer to live up to its duty of care obligation, which is a big, big word,” she said. “A big phrase in global insurance is the duty of care that we have, that employers have to their employees and the individuals working on their behalf.”
But it’s not just evolving risk that’s reshaping the insurance landscape – tech has been impacting the sector for decades now. And, with the influx of new tools such as generative AI, this doesn’t look set to slow down any time soon.
“Technology continues to allow us to improve upon existing processes, products, and service,” said Lumpp. “There’s a lot of conversation going on around big data, AI and robotics. In my world, it all comes down to the data and what we can improve upon from those insights - whether it’s the business planning process for clients or it’s the day-to-day operations.
“We’re consistently growing our data analytics to better understand what our clients need. And at the end of the day, this helps us improve the engagement that we have with our them, streamlining the process to find efficiencies. All of those things help our clients.”
