Risk management is rising up the corporate agenda, but in a competitive world (re)insurers need to take the initiative, says Marie-Louise Rossi.

As new risks emerge, it is the job of the insurer and reinsurer to adapt and innovate. By being one step ahead as an industry, we can ensure that the products we offer match the needs of our customers and take account of the changing world in which we live.

It is a world not only of changing risks, but of changing attitudes. (Re)insurers have believed for some time that society has become more litigious. The second UK Bodily Injury Award Study published in October by the IUA and Association of British Insurers (ABI) with cross-industry support, has identified and measured this trend in cash terms in UK motor accident injury claims.

What is true for motor accident awards - the study found that claims were rising at over 12% per annum, while the number of injuries sustained in motor accidents has not gone up at all - is equally true across the spectrum of classes of business covered by (re)insurance.

Employees are becoming more aware of their rights. As a society where rapid communication is the norm, we are necessarily becoming more adept at anticipating and reacting to the risks we face on a business and individual basis. Companies are finding that their shareholders will no longer tolerate certain levels of risk - they are demanding that the necessary procedures and practices be put in place to safeguard against unforeseen - but not unheard of - circumstances.

The Turnbull Report on corporate governance in the UK goes a long way in recognising the societal changes which have occurred over recent years. It will force risk management onto the boardroom agenda of every listed company, if, indeed, it is not there already, and will encourage a sound internal control and reporting system.

This is an important step in adapting to today's risk culture, taking a pro-active view of risk. But bringing the matter to the boardroom is only part of the answer in developing effective strategies for risk management. A wider variety of risk management solutions should be made available to customers, and this is where (re)insurers come in.

Just as the role of the risk manager has changed, so (re)insurers, too, must adapt. In an environment of over-capacity, they must consider where and how they can gain competitive advantage over both their industry peers and peers in other sectors - such as banking. Innovating means looking at both new insurance products and how we can best adapt traditional solutions to a modern environment.

At a recent seminar on alternative risk transfer (ART), the first 20 minutes of the discussion revolved around the definition of ART. I suspect that had the audience become involved at this stage, the session could have run on for hours. Some “alternatives” have existed for some time, and one person's “alternative” could be another person's usual practice.

But whatever the semantics, (re)insurers owe it to their customers to consider a wide range of underwriting solutions. Where a traditional (re)insurance contract is chosen, sound underwriting and effective claims management will benefit from a pro-active approach. This, as I have written in a previous column for Global Reinsurance, is the thinking behind the many research projects the IUA commissions on behalf of its members, which aid the underwriting decision process.This is also the thinking behind the code of best practice for the rehabilitation of bodily injury victims, published as part of the IUA/ABI Second UK Bodily Injury Awards Study. Considering the long-term care of seriously injured people against the possibility of getting them back to work, it is in (re)insurers' interests to promote the rehabilitation of accident victims. Beyond cost savings, this would bring the focus back to the customer. The expectation of accident victims to be able to get back to work, back to a “normal” pattern of life is growing along with medical advances. Once more, attitudes have changed.

The wider context is again significant. The Woolf reforms of civil justice in the UK, which encourage early settlement of claims by promoting alternative dispute resolution against litigation, have created the right environment to push rehabilitation further up the agenda.

It is, however, a global issue - one which I raised as speaker at the 3rd Asian conference on motor insurance in October - and one which, in a world of changing attitudes and expectations, perfectly illustrates the benefits that a pro-active approach and collective will can bring.

Marie-Louise Rossi is chief executive of the International Underwriting Association.