Page 18 - The Insurance Times December 2024

ERM

ERM

Implementation

Challenges in the

Indian Insurance

Sonjai Kumar Dr Purnima Rao
Sector Certified Fellow of the Associate Professor,
Fortune Institute of
Institute of Risk
Management, London International Business,
New Delhi, India

This article is a snapshot of ERM implementation challenges identified by discussing the current
position within the insurance sector in India with Chief Risk Officers, Heads of Risk, and other
personnel working in the Risk Team.

Introduction not all risks, such as Operational Risks, Cyber Risks, and Regu-
latory risks, can be priced, necessitating the need for ERM. Over
There is a dearth of research on enterprise risk management
(ERM) in the Indian insurance sector. The research started the last 20 years, it has been observed that many global events,
such as the 2008 economic crisis and COVID-19, have had sig-
in 2020 to identify the inherent embedding of ERM within
nificant adverse impacts on the insurance industry.
the Insurance sector in India. There are a couple of objec-
tives to unearthing the ERM position; one is identifying the
Property insurance prices in the US and Australia are in-
ERM implementation challenges in the insurance sector.
creasing due to rising claims from floods and natural calami-
Upon reviewing various research papers globally on ERM in
the insurance sector, it is found that very few papers are ties. The Indian market has witnessed repeated capital in-
jection by the Government to the three nationalised gen-
written on ERM implementation challenges. However, such
eral insurance companies. Further, few private insurance
papers are written in other areas, such as construction and
companies have undergone mergers and acquisitions. The
other industries.
insurance industry must prepare for the forthcoming climate
This article is a snapshot of ERM implementation challenges
identified by discussing the current position within the in- ̸» ·²¬»®ª·»© ­«¹¹»­¬»¼ ¬¸¿¬ ­±³»
surance sector in India with Chief Risk Officers, Heads of Risk, ·²­«®¿²½» ½±³°¿²·»­ ·¼»²¬·º§ ³¿²§
and other personnel working in the Risk Team.
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Importance of ERM in Insurance ï𠬱 îð ®·­µ­ò ̸» ½¸¿´´»²¹» ·²

Risk is inherent in the insurance business, where customers ·¼»²¬·º§·²¹ ¬±± ³¿²§ ®·­µ­ ·­ ´±­·²¹
transfer their risk to the insurance company. Premiums col- º±½«­ ±² µ»§ ®·­µ­ò
lected from the customers are the cost of the risk; however,

The Insurance Times December 2024 17