ERM Implementation Challenges in the Indian Insurance Sector

This article is a snapshot of ERM implementation challenges identified by discussing the current position within the insurance sector in India with Chief Risk Officers, Heads of Risk, and other personnel working in the Risk Team.

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Introduction

There is a dearth of research on enterprise risk management (ERM) in the Indian insurance sector. The research started in 2020 to identify the inherent embedding of ERM within the Insurance sector in India. There are a couple of objectives to unearthing the ERM position; one is identifying the ERM implementation challenges in the insurance sector. Upon reviewing various research papers globally on ERM in the insurance sector, it is found that very few papers are written on ERM implementation challenges. However, such papers are written in other areas, such as construction and other industries.

This article is a snapshot of ERM implementation challenges identified by discussing the current position within the insurance sector in India with Chief Risk Officers, Heads of Risk, and other personnel working in the Risk Team.

Importance of ERM in Insurance

Risk is inherent in the insurance business, where customers transfer their risk to the insurance company. Premiums collected from the customers are the cost of the risk; however, not all risks, such as Operational Risks, Cyber Risks, and Regulatory risks, can be priced, necessitating the need for ERM. Over the last 20 years, it has been observed that many global events, such as the 2008 economic crisis and COVID-19, have had significant adverse impacts on the insurance industry.