Page 18 - The Insurance Times February 2025

sions after the challenge from the risk team. The risk func- though Solvency-II, a risk-based capital regime in Europe,
tion in the Indian insurance sector challenges the business was developed in 2016, some of these issues were expected
unit, and decisions are also changed, but the exact quanti- to be addressed in those countries. In contrast, the Indian
fication is not known. The concept of veto to the CRO in the insurance market has yet to adopt a risk-based capital re-
Indian insurance sector is not there. gime. Since development in enterprise risk management
(ERM) optimises the capital requirement, thus the develop-
Involvement in strategic decision-making ment of risk-based capital accelerates the development of

Half of European respondents said the CRO is fully and con- ERM. Therefore, the development of ERM in the Indian in-
sistently involved in strategic decision-making, with the right surance market is in an early stage.
to either veto or escalate a strategic decision-overruled only
by the CEO. The impact on the overall risk profile, appetite, Skilled resource problems are found in both markets, despite
and risk strategy is consistently considered in strategic de- being in the European market, because risk management
cisions. As stated above, risk-based decision-making is a education is more developed than in the Indian market. On
weaker area in the Indian insurance market, where only the data issue, Indian respondents highlighted having a
58% of respondents agreed. Another question to facilitate centralised database to remove the dependence on the first
risk-based decision-making was whether the Risk Manage- line. Providing oversight on the first line is one of the key
ment Framework has a documented list of key business ar- roles of the risk function; it is not very clear to the Indian
eas; only 52% of respondents agreed with this question. List- respondents whether they are challenging enough. Indian
ing key decisions within the risk management framework risk function is batting on a weak risk-based decision-mak-
helps develop the culture of risk-based decision-making to ing wicket. Relationships with stakeholders have a high per-
make a good start. centage of agreement among the respondents, whereas
Indian CRO's communication with the stakeholders has a
Conclusion higher percentage of agreement than its European coun-
There are many similar development requirements for risk terpart. The regulator or the Board does not give the veto
function between European and Indian insurers. Even power to CRO.

New trends in embedded Insurance

E mbedded insurance is revolutionizing the way insurance 3. Expansion into New Markets:
products are offered, seamlessly integrating coverage
Embedded insurance is gaining traction in unconventional
into the purchase of other goods and services. This innova- sectors like ride-hailing, food delivery, and subscription-based
tive approach ensures convenience and accessibility for cus- services. Drivers, couriers, and freelancers are being offered
tomers while opening new distribution channels for insurers. microinsurance plans that are cost-effective and tailored to
their specific risks.
1. Technology-Driven Integration:
Advanced APIs and digital platforms are enabling seamless 4. Subscription-Based Insurance Models:
integration of insurance products into e-commerce, travel
booking, and fintech apps. These technologies allow insur- Embedded insurance is shifting towards subscription-based
models, allowing customers to bundle multiple policies into
ers to embed policies at the point of sale, creating a fric-
one plan for added convenience.
tionless customer experience.
2. Personalization of Coverage: 5. ESG Integration:
With the help of AI and data analytics, insurers can offer Embedded insurance providers are aligning products with
hyper-personalized coverage tailored to individual needs. For Environmental, Social, and Governance (ESG) goals, offer-
example, travel insurance is adjusted based on the destina- ing coverage that promotes sustainable practices, such as
tion, trip duration, and traveler profile. carbon-offset travel policies.

The Insurance Times February 2025 17