Adam Lei: Attracting top talent will be a major challenge

Adam Lei, head of enterprise risk management at National Western Life Insurance reviews the key ERM developments of 2021 and his outlook for 2022

What steps have you taken to return to the 'new normal' working pattern?

The hybrid work model in which employees from departments such as IT, legal and actuarial can choose to continue to work from home, or be at the office, or some combinations is needed because there continues to be some logistical complexities related to Covid-19 for some employees.

The company also recognises the importance of an in-person work setup, which facilitates knowledge sharing and so on—a hybrid model provides such flexibility.

What was the most positive enterprise risk management (ERM) development of 2021?

For us, it is the education and the gradual acceptance of ERM at the highest level of management.

We also built and implemented an enterprise-wide risk analytical model. Outputs from the model were used in our own risk and solvency assessment report and in several key management decisions.

At the industry level, I could see the role of ERM was being elevated due to the pandemic and the subsequent economic downturns. While the best ERM should be invisible, from my conversations with fellow ERM practitioners, the market volatility and the operational difficulties experienced in the early stages of the pandemic highlighted the importance of a sound ERM function at the insurance companies.

What is the biggest ERM challenge in 2022?

Staffing. The white-hot labour market, with the highest number of job openings over the past two decades, is creating significant staff turnover in the insurance industry. How to attract and retain top talents at insurance companies will be a key consideration in 2022. At the end of the day, insurance companies can't thrive without the right personnel.

What trend is going to have the biggest impact on the insurance industry in 2022?

For life/annuity insurance companies, the large scale "invasion" from the private equity or asset manager backed newcomers most likely will reshape the industry.

During 2021, P/E firms made aggressive moves to acquire re/insurers in the life/annuity line. I anticipate this trend to continue in 2022.

Besides the P/E-backed newcomers, I consider insurtech companies [will] continue to lead innovation in distribution and risk selection.

What emerging risks are you most concerned about?

Cyber security, potentially high inflation, whether this is good or bad depends on the path of inflation, and uncertainty of monetary policies.

As mentioned before, staffing should be a strategic consideration for ERM in 2022.

Significant loss and turnover of staff can create significant execution risks for strategic initiatives.

If you could have one wish for 2022, what would it be?

Gradually higher interest rates and investment yields.

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