Insurers must brace for change: PwC report

Insurers need to brace themselves for some substantial changes to the world of risk over the next decade, according to Andy Moore, global insurance risk and regulatory leader at PwC UK.

Moore told Monte Carlo Today that companies had to stop looking in the rear-view mirror and instead look ahead at the risks that will emerge around 2030, as laid out in PwC’s new report, The future of risk, in which PwC sets out its view on how the insurance risk function would develop.

“We want to be in the position where the chief risk officer is looking forward and charting a course so that insurance companies can navigate the road and get to their destination safely,” Moore said.

“The report looks at some of the disruptors such as climate change and workforce for the future all of which are impacting insurers.”

Looking at technology, Moore said that at the moment assisted intelligence is being used by many workforces, which is the automation of repetitive, standardised or time-consuming tasks.

PwC foresees that augmented intelligence will emerge around 2030, whereby humans and machines will collaborate to make decisions. Beyond 2030 autonomous intelligence might emerge, in which the future of humans in the workforce is questioned, because many decisions will be made by artificial intelligence.

As well as changes in technology PwC sees four factors impacting the way risk is looked at. The first is rapid urbanisation as more people move to cities, which might lead to a spike in crime.

The second is climate change and resource scarcity. The third is a shift in global economic power, as countries such as China become more powerful. The fourth is demographic and social change, as workforces increasingly age in many countries, altering workplace risk dynamics.

In order to cope with these factors, Moore said, PwC has identified four pillars that chief risk officers of the future need to bear in mind. First, insurance companies need to make the best use of new technology.

Second, they need to make the best use of data and advanced analytics. Third, they need to use the skills and capabilities of their workforce to their best advantage. Last, they need to create a corporate culture that gives them an edge in taking on all of these future challenges.