The growing demand for climate risk software to help insurers cope with climate change is the top trend emerging from this year’s InsuranceERM technology guide.
Each year, InsuranceERM’s Technology leader offers a comprehensive list of international technology providers and their software products that insurers use for risk, capital and wealth management.
The list also includes notable trends and needs that technology providers see from their insurance customers.
The focus of insurers on dealing with and managing climate risks has become clear this year in more than 100 questionnaire responses from technology providers worldwide.
One software provider said: “We are seeing an increasing demand for sophisticated economic and climate scenarios and solutions that can convert these scenarios into optimal balance sheet management decisions.”
Another provider noted the demand for risk identification and measurement related to climate risks in economic and regulatory capital.
One provider said InsuranceERM that chief risk officers and the actuary function take climate risk into account in their asset allocation, since the concept on the liabilities side of the balance sheet is “quite mature”.
The seller said, “Insurers need to understand how different climate change scenarios could affect financial markets and their holdings over a range of time horizons.”
According to vendors, having technology to deal with a wide variety of risks and maintain operational resilience in today’s post-Covid-19 world is critical for insurers today.
One provider said the low interest rate environment and increased focus on risks related to Covid-19 are also pushing insurers to rethink their investment strategies.
This trend and the increased risks caused by Covid-19 are driving insurers’ demand for sophisticated stochastic modeling software in order to record the dependencies of these risks and provide insights on both an economic and an accounting basis, the provider explained.
Another observation of this year’s technology is that IFRS 17, the new accounting standard for insurance contracts, is spurring insurers on to massive financial transformation projects.
After all, as mentioned in last year’s technology list, the demand for cloud technology continues to be the focus of insurers.
This is creating a trend in which capital models are increasingly being processed using cloud technology, “which offers the opportunity for lower costs, increased flexibility and performance, and lower risk,” commented one vendor.
The technology guide 2021-2022 is expected to be released on. released InsuranceERM’s Website on September 13th and in the fall print edition.
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Cintia Cheong, Ronan McCaughey