Insurance boards must lead their organizations by considering industry shifts propelled by regulatory changes, technological innovations, and global tax developments, according to KPMG.
A commentary published by the professional services firm called on boards to “[seek] information to understand both the opportunities and the risks” that relate to these trends.
Beginning with changes in the regulatory environment, KPMG highlighted the increased focus on compliance with IFRS 17.
IFRS 17 adaptation has prompted insurers to streamline business processes and the burden on employees, clients, and partners, according to KPMG. This subsequently shifted focus to evaluating successes and identifying areas for improvement.
KPMG’s commentary also underscored the prevalence of discussions about customer experience, generative AI, equity, diversity and inclusion efforts, and ESG practices.
Insurance boards will have to oversee climate risk and ESG reporting, according to KPMG. The firm stressed that management teams should closely monitor regulatory developments and provide timely updates to the board.
“The board’s guidance and support of management are critical as insurers work to integrate climate initiatives into business strategy, governance, risk management, investment and underwriting decision-making, product design, claims handling and operations,” KPMG said.
As for the global tax environment, attention has primarily been focused on BEPS 2.0, the OECD and G20-driven initiative concerning Base Erosion and Profit Shifting. Canadian organizations have been scrutinizing the potential impact of BEPS 2.0 on dividends, given its proposed minimum tax rate for multinational corporations.
“Going forward, boards need to prioritize agility, stay abreast of risk, embrace innovation, and invest in business resiliency,” said KPMG.
“On one hand, that means balancing the lessons learned from the past few years on customer, supply chain, talent, and ESG challenges, while also governing during times of uncertainty. On the other hand, boards need to continue to transform in new directions by exploring the use of new technology to help monitor risks and execute their roles.”
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