What can report recommendations tell us about the state of the market?
The authors of LCP’s ninth annual analysis of Solvency II reports from 100 of the largest non-life insurers in the UK and Ireland, make the following recommendations based on their findings.
2024 recommendations:
- Maintain capital resilience
- Formalise emerging risk governance
- Embed climate risk into decision-making
- Evolve cyber and AI risk management
- Maintain pricing discipline
Read in isolation it is reasonable to deduce that climate change and artificial intelligence are key risks confronting the market, while the need to maintain capital resilience and to maintain pricing discipline may well be indicators of difficult market conditions.
Viewing the recommendations in relation to last year’s report, which covers a similar sample, may shed light on the state of the insurance market and the general direction of travel of the global economic and risk outlook.
2023 recommendations:
- Enhance transparency around emerging risks
- Develop tailored stress testing and scenarios
- Prepare for upcoming regulatory shifts
- Integrate sustainability into risk management
The rise of the machine
The comparison between the two years points to the rise of artificial intelligence as the “new kid on the block” of emerging risks. Evidence for this can be found when looking across the full universe of SFCRs in the UK and Europe.
Previous analysis conducted by Solvency II Wire Data showed the growth of climate risk reporting in the SFCRs, back in 2020, which is now maturing an being embedded in insurers’ risk management practices.
Similar, analysis on even as narrow a term as “artificial intelligence” shows the number of mentions doubled since last year, albeit less than 10 percent of reports mentioned it.
Is the mood music changing?
However, most surprising is that the 2023 report does not make any recommendations relating to the need to maintain capital resilience or maintain pricing discipline.
Were these not issues last year?
Or is it that case that the emerging risks of last year are maturing into material risks that are starting to have an economic impact on the insurance industry?
To explore these questions (and to find out what we can learn about climate change from our early ancestors) tune in to our webinar on Tuesday 9 September 2025, 10.00 UK / 11.00 CET.
Managing risks in an era of transformation: Lessons from 100 UK and Irish non-life SFCRs
Panel:
Andrew Dyer, Chief Risk Officer, Aspen
Thomas Peacock, partner, Slaughter and May
Wendy Kriz Evans, principal, LCP
Chair: Gideon Benari, Editor & Founder, Solvency II Wire
Thomas Peacock, Partner, Slaughter and May
