Following the comments of Deputy President Jo Willaert on the development of the risk management profession, FERMA put some questions to an insurance professional with great insight, Mike McGavick, Chief Executive Officer, XL Catlin.
In the next five years, what issues do you think will most challenge the professionalism of the insurance industry and corporate insurance buyers?
We are at a critical juncture. The insurance industry will find itself heading down a road to either greater or lesser relevance. It is fair to say the next five years are critical.
We have to find ways to respond to the forces shaping our industry – the rise of alternative capital plus a necessity to use better analytics/data and including increased regulatory activity – and thereby increase our own relevance.
Alternative capital has a clear effect on reinsurance pricing, but we want to focus on what it means for our ability to innovate and use this capacity as fuel for new risk solutions.
With regard to analytics and data, it is clear. Companies that adopt data driven decisions are more profitable and productive than those which do not. Big Data is core to business strategy and success – and this applies to insurers as much as our clients – and we are determined to utilise the highest level of analytics and information to solve problems for our clients.
And, my view regarding regulation is that we need to be precise about the problems we are trying to solve and design the solution to the problem.
How companies respond and work with these forces will ultimately define their success. What I am sure of is that scale will become increasingly important over the next five years and beyond. This was a driving factor in our decision to join with Catlin.
What skills or qualifications do you think risk managers/corporate insurance buyers will most need to master these changes?
The changes occurring in the industry have the potential to be transformative, and this actually means that now is a great time to be in the business of risk management and mitigation. There is a great opportunity to reinvent the role and drive new solutions and ways of working.
Succeeding in times of transformation requires adaptability, and a willingness to question how things were done previously, to ask if there is a way to make it better. We have to be able to change the way we think about risk – learn the lessons of the past but not restrict our ability to advance into the future.
So mastering these changes is about more than qualifications; it is about a mindset and a collaborative approach between risk manager and insurer.
What skills or qualifications do you think risk managers need in order to secure a position as a preferred board adviser on risk?
This is simple; you need to lead your organisation’s thinking on risk. And you need to embrace deeper technical sophistication in terms of IT and analytics. The risk managers that will be truly valued in this evolving landscape are going to be those willing to lead innovation by looking at risk from a fresh perspective.
Ask your insurer: “What are we getting from you?” Be part of an open dialogue from which solutions can be born, because ultimately, delivering the solution is going to win the trust and respect of the board.