Tag Archives: risk management

Risk management frameworks are changing alongside the climate

Financial services firms are focusing on risks associated with climate change more than ever now. In part, the heightened attention results from increased regulatory activity in this area.

Firms are now required to evaluate the potential financial impact of climate change and include climate change considerations within their risk management frameworks.

A typical risk framework is anchored around the risk appetite associated with a firm’s key objectives. Milliman consultant Neil Cantle provides more perspective in his article “Look, learn, predict.”

COVID-19: What have we learnt from Solvency II reports from UK life insurers?

In March, the European Insurance and Occupational Pensions Authority (EIOPA) published its recommendations on the implications of COVID-19 for supervisory reporting and financial disclosure. EIOPA recommended that insurers consider the pandemic as a “major development” and publish appropriate information in their Solvency and Financial Condition Reports (SFCRs) on the effect of COVID-19 on their business.

However, EIOPA did not prescribe the possible format or extent of such disclosure. As a result, different approaches were taken by insurers to meet the disclosure requirements. They ranged from having dedicated sections for the impact of COVID-19 to having a few lines giving a brief description of the potential impact at much higher levels.

In this paper, Milliman’s Paul Fulcher, Sihong Zhu, and Samuel Burgess review the SFCRs recently published by major life insurers in the United Kingdom to examine the disclosures made on the impact of COVID-19 and what can be learnt about the impact the epidemic has had.

Overview of Solvency II’s Prudent Person Principle

In May, the Prudential Regulation Authority (PRA) published Supervisory Statement (SS) 1/20 on its latest expectations of the application of the Solvency II (SII) Prudent Person Principle (PPP) rules to insurers’ investment strategy, risk management and governance.

The SII PPP requires insurers to conduct investment activities in an appropriate manner, and to only invest in asset risks which they can properly identify, measure, monitor, control and report, and which are in the best interest of policyholders. The importance of this has been highlighted by the increased trend towards investment in less liquid and more complex assets as well as recent economic volatility.

This paper by Milliman’s Paul Fulcher and Sihong Zhu summarises the key PPP expectations from the updated text in the SS and their potential implications for insurers.

Milliman wins three InsuranceERM Americas Awards for its insurtech products and risk consulting services

Milliman is pleased to announce that the firm has won three 2020 InsuranceERM Americas Awards for its insurtech products and risk consulting services. The goal of the IERM Americas Awards is to highlight enterprise risk management leaders in the Americas.

In the technology category, Milliman’s Nodal™ was named “Analytics Solution of the Year” while Milliman’s Arius Enterprise® won “Cloud Technology of the Year.” Awards in these categories recognize insurtech solutions that enable strategic decision-making and provide risk insights that can improve efficiency and operations for (re)insurers. For instance Nodal, Milliman’s predictive modelling platform for early claim intervention, uses machine learning to comb through unstructured data and identify high-risk claims, and has helped clients reduce claims severity by 15% and overall losses by 41%. Meanwhile, Milliman’s Arius, one of the industry’s most comprehensive reserve analysis solutions, has saved clients hundreds of hours per year while simultaneously improving analyses and governance over data and processes.

Milliman was also recognized with a 2020 InsuranceERM Americas Award for its risk consulting services, with three members of the firm’s Chicago Life ERM practice taking home “Risk Team of the Year.” Anthony Dardis, Ariel Weis, and Chloe Lau have, combined, over 60 years’ experience on both the assets and liabilities sides of life insurance, and are well-known for their benchmarking capabilities and “practical-first” approach to risk management.

“Transformation in the insurance industry begins by leveraging new technologies in conjunction with the latest data and expert analysis, three areas in which Milliman excels,” says Milliman President and CEO Steve White. “Managing complex risks requires both the best expertise and the most innovative tools, so we feel gratified to have won IERM Americas Awards for both our risk consulting and technology solutions.”

For more information on Milliman’s insurtech products, including Nodal and Arius, click here. For more information on Milliman’s enterprise risk management solutions, click here.

Captives must reassess risk exposures due to COVID-19

The COVID-19 pandemic has forced risk managers to reassess the way they manage their exposures. In this risk environment, what implications exist for the captive insurance industry? According to Milliman consultant Mike Meehan, it is important for captives formed before 2020 to assess the potential effect of COVID-19 in the event they are unprepared to deal with claims arising from the virus. He explains more in his article “Adapting risk strategies to cope with COVID-19.”

Critical Point takes a look into the costs and risks associated with black lung disease

A recent Centers for Disease Control and Prevention (CDC) report indicates that the rate of black lung disease is going up. Black lung disease is also known as coal workers’ pneumoconiosis, and it’s brought on from inhaling coal dust and working in a coal mine. According to the CDC, black lung cases in miners are the highest they’ve been since recordkeeping began in the early 1970s.

In this episode of Critical Point, Milliman’s Christine Fleming and Travis Grulkowski discuss what these statistics mean for companies and insurers looking to manage this risk for their employees.

To listen to other episodes of Critical Point, click here.