Page 30 - Insurance Times August 2021

FLYING BLIND IN AN

ADVERSE CLIMATE!

POOR PRICING AND

RESERVING DO NOT BODE

WELL FOR INSURERS AS THE

#CLIMATECRISIS WORSENS

J ust as the Indian insurance market was beginning to HIH saga

open up to private players, two companies – one in
In The Inside Story Of Australia’s Biggest Corporate Collapse
Australia (‘HIH’) and the other in the UK
(‘Independent’) coincidentally went into run-off. For
opera is familiar – the insurance company collapsed in 2001
similar reasons. Pricing and reserving! Underlying these Mark Westfield documents how: ‘The plot of the HIH soap
with debts of about $5.3 billion, which Ray Williams and
two was poor corporate governance. Why is it his cohorts achieved through gross mismanagement,
important to revisit? One, most newcomers to the Industry
largely charging too little for premiums and failing to put
perhaps missed out on them. Two, in a world besieged by
away enough to pay out claims.’
Climate Crisis – these reasons will play out yet again. However,
the ground has moved significantly since then. The canvas has The HIH royal commission probing the collapse of HIH
widened into ESG (environment, societal and governance).
turned out to be a very costly case study into how not to
run a company, a poor corporate governance culture and

About the author risk management gone wrong. So what can corporate
leaders learn from Australia’s largest ever corporate
Praveen Gupta collapse?
Y Using qualified & experienced directors does not
Praveen Gupta is a thinker, thought leader
and a proven professional with profound guarantee success.
understandings of the insurance industry. Y Directors must probe senior management and ask
He pursues his passion of exploring, learn- questions.
ing and sharing from the exciting inter-sections between Cli-
mate Crisis, Diversity, Governance, Risk and Tech. He essays Y Directors cannot abdicate responsibility.
his passionate views through his blog; Y Long term strategies need to be developed and
www.thediversityblog.com. questioned.

30 The Insurance Times, August 2021