Financial turmoil will push investment in risk and compliance
The collapse of Lehman Brothers and the rescue of AIG by the United States Government will have a long-term effect on insurer technology strategies in 2009, with far greater investment in risk management and compliance systems than previously planned, but could also lead to the end of the soft market, according to a DataMonitor report.
A recent DataMonitor survey showed that 61 per cent of non-life insurers and 47 per cent of life insurers were planning to increase their investments in compliance systems and risk management in 2009. The report stated that those numbers were expected to increase after the liquidity crisis within AIG.
The report said: “Vendors must react to this demand by not simply providing more of the same but by designing innovative ways to re-engineer the risk management practices of insurers.”
The financial turmoil could lead to the end of the soft market, according to the report, with the industry gaining greater pricing power after a market shock, and a weak AIG causing a supply shock that would put upward pressure on prices.
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