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News Article : Profound changes coming to insurance industry
Category: Short-Term Insurance : Risk Management
Author:Sandra Sampayo
Email:[email protected]
Posted:11 Mar 2011

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Growing systemic risk a crucial issue for the insurance industry

United Nations meeting in Johannesburg ahead of Rio+20 will formulate principles and actions by which to keep insurance sustainable in a changing world

An influential gathering of businesspeople, change management strategists, scientists and global scenario planners takes place in Johannesburg next week in the first of a series of global regional meetings that will drive fundamental changes in the insurance industry around the world.

The meeting, the PSI (Principles for Sustainable Insurance) Regional Consultation Meeting for South, West and East Africa, is a project of the United Nations Environmental Programme Finance Initiative (UNEP FI) and is presented by the UN and hosted by Santam and the South African Insurance Association (SAIA).

Its specific purpose is to consult on the draft principles for sustainable insurance (PSI) ahead of the United Nations Rio+20 Conference on Sustainable Development scheduled for May, 2012. 

It is seen as a groundbreaking and crucially important gathering for the insurance industry nationally, regionally and globally as the industry comes to terms with the inevitability of rapid change in climate, in regulatory environments, in governance and in socio-economics.

Speakers include Peter Willis (Director of the Cambridge Programme for Sustainability Leadership in South Africa); Deon Nel (Ecosystems Research, Natural Resources and the Environment at the CSIR); Ian Kirk (Santam CE); Vanessa Otto-Mentz (Head of Strategy for Santam; Board member for Africa UNEP FI Insurance Commission; and Strategic Coordinator for Sustainability in the short-term insurance industry); Paul Clements-Hunt (Head of the UNEP Finance Initiative); Butch Bacani (UNEP FI); and Barry Scott (South African Insurance Association Chief Executive).

Topics for discussion include subjects such as The Rationale, Process and Aims of the PSI Agreement and the Principles themselves, The Loss and Damage Component of Cancun Agreements; and UNEP's Proposals to the UN Framework Convention on Climate Change.

Ian Kirk (Pictured above), Santam CE is on record saying that growing systemic risk was a crucial issue for the insurance industry. He told sector analysts recently that it was his hope that Santam could, in partnership with SAIA and other players, improve the management of these risks.

It was his specific objective to achieve better management of systemic risk during his term as Santam CE.

"The PSI, or principles for sustainable insurance, is of crucial importance to the industry," says Vanessa Otto-Mentz, Santam Head of Strategy.

"The world in which we live, and in which we do business and offer a service, is beset by rapid change. Among these are changes in climate and weather that profoundly impact risk and risk management."

"However, there are other changes, too, that the industry must contend with. They include changes in governance; in the regulatory environment; and in communities and society at large."

"The Johannesburg meeting will consider the principles developed by the PSI workgroup and will evaluate them to measure their soundness for full business sustainability."

Butch Bacani of UNEP FI (programme manager for the PSI workgroup) says the issues are 'critically important' for insurance businesses globally.

"The whole industry has a crucial role to play in supporting sustainable economic development. This workshop will be a means by which to consolidate and further that work."

SAIA Chief Executive, Barry Scott (Pictured right), looked forward to the discussion and, especially, to reaching agreement with SAIA members, partners and stakeholders in the broader industry.

"SAIA is proud to be affiliated so strongly to this meeting and to creating and enabling an environment for the United Nations on the sub continent," he says.

Viviene Pearson, General Manager at SAIA, adds: "PSI consultation will lay solid foundations for the path ahead. They will bring greater sustainability to insurance. I look forward to the United Nations meeting - and especially to the difference it and future meetings will make to the insurance industry at national and international level."

The principles, Otto-Mentz says, will include concrete actions for long-term success and sustainability of the industry value chain. They will consider the full range of risks and opportunities those risks present. 

They include underwriting risk; product and service development matters; claims management; environmental, social and governance risks; and business strategies and operational issues.

The meeting takes place on 15 and 16 March 2011 in Auckland Park. Further UNEP FI regional meetings will take place in Brazil in May; Canada (June); the Middle East and North Africa (in a venue yet to be confirmed) in July; New Zealand in August; Tokyo in September and Munich in October.

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