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October 4, 2016

Improve Reputations by Digital Risk Profiling

Summary:

Profiling clients’ risks before recommending insurance reduces conflict-of-interest perceptions surrounding issues like sales commissions.

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Perceptions about conflicts of interest in the insurance industry frequently damage reputations. Profiling clients’ risks before recommending insurance reduces conflict-of-interest perceptions surrounding issues like sales commissions, over-/under-insurance and inappropriate/inadequate insurance. Risk profiling can improve the insurance industry’s reputation, letting insurance professionals:

    • Engage with clients as trusted risk advisers rather than insurance product sellers.
    • Demonstrate more intelligent matching of risks and insurance.
    • Tailor the insurance product to specifically identified risks.
    • Provide greater clarity on both uninsured and insured risks.
    • Reduce under- (and non-) insurance through greater focus on higher risks.
    • Ensure that insurance products are offered for the highest risks and that premiums are spent on areas of highest risk accordingly.
    • Eliminate perceptions of over-insurance by using risk matching.
    • Identify client risk management controls, thereby assisting insurance underwriting.

The inclusion in risk profiles of independent risk benchmarking for specific industries and multiple risk areas also assists in ameliorating perceptions of conflict of interest. Independent benchmarking provides quantifiable and empirical guidance that is not aligned to an insurance adviser’s commercial self-interest.

See also: Digital Risk Profiling Transforms Insurance

Until now, in the absence of conveniently accessible  benchmarking, hundreds of thousands of advisers have typically found risk profiling to be a time-consuming manual process. For this reason primarily, the use of risk profiling for commercial insurance buyers globally has been very limited and sporadic.

The Risk Advisor digital risk library of 160,000 exposures and controls and 6,000 benchmarks, for 600 industries and 60 risk areas has been built to make risk profiling easy for insurance advisers and their clients.

Risk profiling can improve insurance adviser reputations, and it can reduce compliance breaches and negligence. All of the outcomes from risk profiling contribute to enhanced reputations and help achieve regulatory compliance. An Economist survey highlighted that these are the greatest areas of concern across many industries, not just the insurance industry.

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LRN  (lrn.com ), which has E&C (reputation risk) training for more than 25 million employees of organizations globally, does annual surveys that suggest that conflicts of interest are a major area of reputation risk concern across a  wide range of predominantly U.S. companies, industries and business sectors, as shown below.

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The digital technology era presents a wonderful opportunity for the insurance industry to elevate its reputation, which has heretofore been hurt, often unfairly. The insurance industry pays billions of claims every year, and insurance advisers play an invaluable role in the sustainability of business through risk protection.

See also: Customers’ Digital Expectations

As longtime practitioners in the international risk and insurance sector, the Risk Advisor team members are excited about the opportunity for digital risk profiling to support the insurance industry and its dedicated professionals in getting the great reputations they deserve.

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About the Author

Peter Blackmore is a founder of Risk Advisor, which has established a fully operational interactive digital platform that makes risk management easy for small to medium-sized enterprises around the world. He has been a strategic risk adviser for many years.

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