Jump before you’re pushed

The most resilient organisations act well in advance of regulatory responses, compliance experts say

By Miranda Maxwell

Regulation is largely an exercise in hindsight over foresight, experts at the Curium Risk and Compliance Summit agreed. When action is finally taken, the problem has already taken root, and Gilchrist Connell principal Nitesh Patel says it is a “tough ask” for regulators to grapple with emerging risks.

“You almost need to predict what’s going to happen in the future while still managing a whole range of different stakeholder interests – and then trying to create laws,” he told the summit in Sydney in October.

This means businesses should not wait but should be proactive and introduce the recommended voluntary risk mitigation procedures, Mr Patel said.

In a session on black swan events, Global Finance & Technology Network adviser Andrzej Gwizdalski agreed much oversight is backwards-facing and can come too late. “There is more need for future orientation and anticipation of those problems that we still cannot define – I think that’s missing.

The regulation system is more looking at problems retrospectively, not forward looking,” he said.

Curium co-founder and chief executive Tetiana George said that for the first time, avoiding compliance breaches is achievable with the help of advanced technology – so “almost no one has an excuse not to do it”.

“It’s about catching things early and not letting them happen,” she said. “With AI technology scanning all of that – it’s possible, real. It’s a choice. It’s actually fascinating if you start thinking about the future angle and growing resilient businesses.”

Here are some more insights from the summit.

Enthusiast Motor Insurance risk and compliance specialist Anne Johnston

I liken risk and compliance to a seatbelt. It keeps you safe – but you’re still allowed to drive really fast. 

Assetinsure head of underwriting and partnerships Chris Toft

If we do have to comply with things, how can we do it in an innovative way using new technologies and systems, whether it’s AI or anything else, to make sure we’re managing risk in a cost-efficient manner – we’re not being tied down by red tape and we’re actually deriving value? These are the rules of the game and it’s on us to make sure [compliance] isn’t holding us back. 

Rhodian Group chief executive Simon Lightbody

Having somebody in charge really helps – rather than it being just a function of the CFO. Part of [agency] evolution is a reporting process that’s delivered by a head of compliance. It shows the importance of compliance when insurers offer their capacity or you engage with them. When they have a compliance person on their side of the table, you have a compliance person.

Hannover Re risk, audit and compliance leader Mowen Lee 

You can outsource business activity but you’re not outsourcing the risk and the ownership of that. We’ve had second thoughts around, ‘Do we really want to partner with them? Are we really going to get that level of required oversight?’

Maybe that’s a compelling factor that can make companies develop their in-house [compliance] capability.

AUB head of compliance Chamila Fernando 

Any expression of dissatisfaction is a complaint. As long as the person complaining is identifiable, that’s a complaint that needs to be resolved through the regulation guidelines. It doesn’t matter whether it’s in writing, whether it’s verbally, whether it’s made on your Facebook channel or Instagram. 

Argyle Insurance co-founder Matt Morgan 

Underwriting agencies are definitely here to stay … We’re now seeing the market reaching over $10 billion in gross written premium; that’s 470% growth over the past decade. Attributes [such as] nimble, modern, specialised expertise, niche products are driving some of that success. So let’s talk about how they navigate  regulatory demand with commercial aspirations.

Envest head of agency commercial partnerships Kassie Federico 

In the old days, insurers that needed a policy or a framework would flick [underwriting agencies] one of their templates and say, ‘Whack your logo on that and change a few words and send it back to us.’ That’s not happening any more.  

The onus is really on us to make sure we are providing them with what they need … We have a skill set, we’re the ones that are dealing with those niche customers. I’ve been in situations where [insurers] have felt they needed to take control but realised very quickly they’re not the experts and so that shifted back  towards us. So it’s just about having honest conversations and collaboration with each other.

Insurance Council climate GM Alix Pearce  

We’re really entering this critical decade of risk … this perfect storm of economic and geopolitical volatility, and hazards and disasters compounding in ways we haven’t seen before. How do you continue to provide affordable insurance in an environment like this?  

There are about 298,000 homes and businesses on the east coast of Australia that have the highest flood risk. We need to target those properties to either retrofit them, lift them or – where the risk cannot be mitigated – we’ve got to buy back those properties.

And we need to stop doing dumb things. We need to stop building in really high-risk locations and expecting a different result. If you tick those two things off, you go a long way to tackling the challenge. 

Swiss Re regional chief risk officer Richard Foda 

There’s a lag in insurance and reinsurance pricing catching up with what we’re seeing in terms of losses.

Over the past 30 years, losses from natural catastrophes have increased threefold, and in fact in recent years it’s been increasing by 5%-7% … driven by the growing population, population shifts, aggregation of wealth in high-risk areas, but also the lag in how we mitigate.

In 2024 only 43% of the gross losses across the world were insured … we’re letting down the shareholders, we’re also letting down our communities as an industry.  The key issue comes back to how we’re modelling it as well. You’ve got to start there: understanding what areas are at high risk.