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On the mission to innovate: Insurers advance regulatory change management and ESG disclosure with technology

The effects of climate change on the insurance industry, the improvement of the customer journey, and the ever-changing sector regulations are three pillars that have shaped the strategic and digital transformation agendas of insurers in recent years.

Discussions at the Insurance Europe’s 14th International Conference, attended by hundreds of insurance leaders and regulators from around the world, brought attention to these, as well as the importance of collaboration, innovation, and education in addressing climate change, digital transformation, and shifting demographics in an evolving landscape.

Fostering a more competitive and resilient Europe: Insurance sector is keeping its promise

Giving his speech at the Conference, the President of Insurance Europe – Frédéric de Courtois, Deputy CEO of AXA, emphasized the need for regulators to collaborate closely with the industry to foster a more competitive and resilient Europe. He outlined a vision for the insurance sector that focuses on prevention, protection, investment, and connectivity to address contemporary challenges.

BR-AG at the Insurance Europe 14th International Conference

Insurers are extending their roles beyond traditional spheres of influence, challenging the perception of insurance as something ‘dry and narrow.’ We fully agree with Juha Koponen, CEO of LocalTapiola Group, who emphasized that insurers must help young people recognize the added value of insurance. This includes providing financial education from an early age, utilizing effective digital communication, raising awareness of insurers’ significant societal roles, and engaging more broadly with civil society.

Climate change, risk mitigation and regulatory changes: Responding to global challenges

Climate change is a significant concern, with increasing catastrophic events leading to substantial global losses. In 2023 alone, the total economic losses from natural disasters worldwide were estimated to exceed 260 billion euros. According to the European Insurance and Occupational Pensions Authority (EIOPA), climate-related losses could account for 25% of total insurance losses, underscoring the financial impact on the industry. Furthermore, a report from Swiss Re indicates that insured losses from natural catastrophes have risen by 250% over the past three decades. These alarming figures highlight the urgent need for the insurance industry to adapt and innovate in response to the growing threat of climate change.

Besides tackling these challenges, as Europe’s largest institutional investor and a major industry with a unique business model, the insurance industry is also an important user and preparer of financial and sustainability (non-financial) reporting.

The insurance industry is highly regulated and supervised, including reporting requirements. Whilst good regulation is vital for a competitive and thriving industry, well-intended but poorly designed rules can have negative consequences.

At BR-AG, we believe the insurance industry must engage with policymakers and stakeholders to ensure reporting measures reflect the business model and achieve their objectives. This engagement helps insurers access the data needed for sound investment decisions while avoiding unnecessary costs and unintended consequences.

In addition, the discussion on competitiveness in a well-regulated environment highlighted the importance of efficient regulation, enhanced data sharing among regulators, and the postponement of sustainability reporting deadlines to allow for better compliance preparation.

Towards meaningful, consistent and comparable sustainability reporting

As investors, insurers require reliable and comparable ESG data on their investments to incorporate sustainability into their decision-making processes and support Europe’s goal of achieving net carbon neutrality by 2050. This data is also essential for insurers to comply with European taxonomy and sustainable finance disclosure requirements.

In this context, European insurers support the ongoing development of EU Sustainability Reporting Standards (ESRS) by the EU Financial Reporting Advisory Group (EFRAG). Getting prepared for the ESRS/CRSD reporting leads reporting entities, including (re)insurers, to wonder what “prepared” looks like. No doubt, telling your ESG story properly takes the establishment of a strong data strategy, coupled with a technology and governance approach to manage technical complexity, and meet legislative and stakeholders’ demands. To help them get prepared, here we have gathered all the must-know essentials about the ESRS: What is the scope? Which companies are impacted? When must companies disclose sustainability information? What are our tips to get started and more.

Digitalization, data standardisation and AI

As the insurance industry becomes more data-driven, the significance of effective data management cannot be overstated. Data management plays a crucial role in transforming insurance operations by optimizing processes, enhancing customer experiences, and ensuring regulatory compliance.

In the fast-paced digital landscape, staying abreast of technological advancements is imperative for insurance companies. 
Data management systems equipped with artificial intelligence (AI) and machine learning (ML) capabilities enable insurers to automate routine tasks, detect patterns in data for more informed decision-making, analyse the data and effectively act on derived insights from it.

Striking a balance between leveraging AI’s capabilities and effectively utilizing internal resources is essential for maximizing benefits. This begins with a willingness to look beyond the surface-level promises of any new technology. For AI, this means understanding its limitations as well as its potential, and focusing on how it can augment insurance company’s abilities rather than replace them entirely.

Among other critical areas, AI enhances predictive analytics in insurance by automating data collection, data analysis, and generating insights. It reveals patterns that humans might miss, leading to more accurate and actionable insights.

It’s time for insurance to introduce data standardization.

Data standardisation is the process of making data consistent and comparable across different sources and systems by incorporating open data standards such as XBRL (eXtensible Business Reporting Language).

It is essential for ensuring data quality, accuracy, and usability for various purposes such as regulatory reporting, risk management, product innovation, and customer experience.

When we talk about data, it isn’t just about standardizing the data; it’s also about improving the quality and robustness of that data to help insurers make informed decisions.

As sustainability moves further into the spotlight for insurance stakeholders and customers alike, the industry establishes data standards to improve the quality of environmental, social, and governance (ESG) disclosures by insurers.

Insurers are adjusting to keep pace with sustainability reporting requirements. The new EU Corporate Sustainability Reporting Directive (CSRD) presents significant challenges not only for European insurance companies but also for their subsidiaries outside the EU.

Under CSRD, companies (or groups) within its scope must include sustainability reporting in their management report, which accompanies the financial statements and corporate governance statement in the annual report. The European Sustainability Reporting Standards (ESRSs) are the EU’s new mandatory standards that companies under the Corporate Sustainability Reporting Directive (CSRD) must align their reporting to.

If you’re considering your next steps to prepare for the ESRS, we recommend starting by familiarizing yourself with its requirements. Educate and upskill your organization, identify the necessary reporting elements, determine the types of data you will collect, and plan how to collect it. Additionally, verify your internal XBRL reporting capabilities.

At BR-AG, we help (re) insurance companies to equip their teams with the technology stack, advice, and advancing sustainability data management and reporting processes that they will use for years to come.

Introducing automation that allows to focus on strategic objectives

Regulatory reporting and a focus on consumer-oriented governance are driving the insurance industry regulatory challenges. At BR-AG, we help (re)insurers to tackle these challenges in and technology-driven, innovative way, ensuring automated data collection, and reliable data quality assurance validation for the complaint regulatory reporting.

Helping (re)insurers to tackle regulatory change management and reporting challenges, we aim to allow them to focus on the strategy to elevate their business, respond to global challenges, contribute to the public good and tackle sustainability risks. Implementing robust data standardisation practices and automated data management cycles we help to ensure unified data understanding inside organisation and unlock actionable analytics for truly data-driven decisions.

Discover scalable solutions and services based on open data standards, such as XBRL, and taxonomies for financial and non-financial (ESG) data reporting for (re) insurance companies, pension funds, and other financial institutions.

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