How Better Risk Controls Helped Canada’s P&C Insurance Industry Thrive

Over the past 20 years, a shift from traditional risk management approaches to enterprise risk management (ERM) has helped the Canadian P&C insurance industry show stronger performance and financial health, compared to to many other industries.

A recent Insurance Institute study noted that this strong performance included reporting an underwriting profit in every year but one since 2003, as well as no insolvencies since 2003.

“This new holistic approach redefines the notion of risk itself, moving from actions aimed at reducing risk or the probability of loss to focusing on managing the positive or negative effects of uncertainty on objectives,” says the report.

During an April 20 webinar on the report, Ian Campbell, vice president of operations for the Property and Casualty Insurance Compensation Corporation, said that benchmark surveys they conducted show that most companies regularly use the ERM best practices.

Respondents answered a variety of questions to find out how companies are making it easier for risk managers to work, including:

  • Do they have access to the board of directors?
  • Does the organization have an ERM strategic framework in place?
  • Is there a board-approved risk appetite statement?
  • Does the organization maintain a risk profile that lists all of its material risks?

“We asked, for example, the person who manages risk – is this person part of the management team?” Campbell told the webinar. “Is there a formal process in place to identify new and emerging risks? And is enterprise risk management strongly integrated into your organization? »

Darius Delon, president of Risk Management 101, told the webinar that it’s also important to look at organizations to determine which risks are, in fact, material.

He noted that ERM allows insurers to look at an entire organization and examine its various divisions and departments to determine how the most significant risks might seep to the top.

“You can’t address all 100 organizational risks,” he said. “But on an annual basis, if you have three or five new risks that are identified or that need better controls, you can actually allocate resources to them – people, money, time – to better manage those risks. .”

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James V. Hayes