One of the biggest changes for Risk Managers in the wake of the Insurance Act 2015 coming into force in August 2016 is a new responsibility for interpreting as well as collating risk data.
In the past, the main challenge was locating and collecting the information required to meet Duty of Disclosure (DoD) requirements. Once collected, Risk Managers could simply dump the data en masse onto brokers and insurers and assume ‘job done’. Even when this went wrong, the broker could be held liable for not accurately presenting the risk to the insurer – there was no fall back on the Risk Manager
This is no longer the case – and the implications are very significant for Risk Managers. Under the new Duty of Fair Presentation (DoFP), Risk Managers must not only demonstrate that all efforts have been made to obtain all relevant and material information and evidence to an acceptable legal standard prior to presenting this information to the insurance market but also specifically highlight material risk information within the presentation.
In effect this means that Risk Managers can no longer supply underwriters with a mass of data – much of it unstructured. Instead pertinent information must be flagged up front to be easily identified as material to the insurance risk.
So what constitutes pertinent information? Obviously each industry will have different significant factors to consider but generic issues will include any change of activity or occupation, or any new operational locations, especially in higher risk geographies such as the Middle East. More specific risks that need to be highlighted would include any new rig operating within deep water or at high pressure for the Oil & Gas market, for example.
The number of material risks that need to be flagged will also vary from organisation to organisation – the challenge is to identify such risks from the volume of information now collected. Risk Managers simply cannot rely on traditional spreadsheets and feel confident that all pertinent risks have been shared. Instead, technology can transform this process by automatically consolidating and aggregating data to create a resource which can be used both to present a clear set of statistics and to highlight material information.
With this single source of information, a Risk Manager can quickly search for specific risks and generate a report for the market, with links to supporting documents if required. The process is fast, simple and effective, minimising the overhead for Risk Managers while providing real confidence that all material information required for compliance to the Insurance Act is being delivered to the market.
Risk Managers have to get used to many changes associated with the Insurance Act but one of the most important to address is the end of data dumping: it is no longer possible to hide key risk factors within a mass of spreadsheet data. The onus is on companies to quickly find a way to categorise and assemble reliable data, with all material information highlighted, to the market.
