On the heels of the 2021 RMIS Survey, Redhand Advisors’ President & Founder, Patrick O’Neill, and Senior Advisor, David Tweedy, authors of the RMIS Report, along with Robert Petrie, CEO & Founder of Origami Risk, and Jennifer Turner, SVP Product Manager at Gallagher Bassett, discussed report findings. These experts offered several key takeaways and discussed emerging trends. The panel also disclosed key insights not included in the 2021 RMIS Report, addressed return on investment (ROI) with RMIS, and acknowledged the growing private equity presence in the industry.
2021 RMIS REPORT SURVEY RESPONSES
Patrick O’Neill commenced the conversation noting that both organizations, Origami Risk and Gallagher Bassett, are recognized as leaders in the industry. The two organizations were joined by 28 other vendors in providing RFI responses and over 1,100 RMIS users who responded to the 2021 user survey. The report is a summation of RMIS user opinions, risk and insurance market trends, how technology can enable teams, and the industry experience of Redhand Advisors. Newly added to this year’s survey was an analysis of the ongoing COVID-19 pandemic and its effects on the industry.
A YEAR FOR MARKET EVOLUTION
Despite facing unknowns throughout the year, the industry continued to persevere and show indicators of healthy growth. O’Neill noted four pillars of development in particular: increased use of and reliance on technology, organizations scoping beyond insurable risk as they strategize for holistic risk management, the independent RMIS market increasing in market size and potential, and many new solutions appearing in the marketplace showing unique promise. Bob Petrie confirmed the growth trends from a vendor perspective noting, “In recent years, over half of our RMIS buyers are coming to us [Origami Risk] from not having a system [and relying on spreadsheets] — they are first-time [RMIS] buyers.”
“Feature innovation in RMIS is undergoing a real renaissance. [...] Origami Risk and its’ competitors have been rapidly adding new features and capabilities that round out the things that RMIS systems can do, which of course is what’s driving deeper use of RMIS by existing customers and also those new features are attracting additional people [who are first-time RMIS buyers] into the market.” (Bob Petrie, Founder & CEO, Origami Risk)
3 INDEPENDENT MARKET TRENDS: DATA, ECOSYSTEM, & HOLISTIC VIEW OF RISK
O’Neill asked Petrie if the significant developments will continue to stand the test of time and what the market could expect over the next 3-5 years. Petrie responded that as capabilities and functions of a RMIS deepen and broaden, the data that is brought into the system will be increased, improved, and of a higher quality. He also identified three key trends to watch:
- Data: Increased focus on data quality with the capacity to handle larger volumes in real-time.
- Ecosystem: A RMIS is the single source of truth inside the risk management department.
- Holistic View of Risk: Break down of risk silos across the organization.
KEY CONSIDERATION: EMERGING TECH CAPABILITIES
O’Neill noted that in the risk and insurance industry and in the wake of COVID-19, “systems are more cost-effective. Costs haven’t been increasing, but the capabilities are.” He continues, “we’re seeing a pretty good increase in the utilization of capabilities that didn’t exist or wouldn’t be considered part of a RMIS 5 or 10 years ago. Enterprise Risk Management (ERM), Governance, Risk, and Compliance (GRC) capabilities, Environmental Health & Safety (EH&S) — all things where there have been standalone capabilities for many, many years, but we’re seeing a blend of that in the RMIS space. They’re not at the adoption level of some of the other things we are talking about, but the fact is they’re growing at a quicker rate.”
When questioned about his experience with these new area trends amidst the pandemic, Petrie commented, “More than 200 of our [Origami Risk] clients adopted our COVID solution that we spun up in a couple of weeks last spring. Is this traditionally insurable risk? Is that something that a risk management department deals with or has dealt with before? No, but we had a very fast, very capable, and very inexpensive tool that we could spin up for our clients and so they moved and are using Origami to do something outside of RMIS with that one example alone.”
KEY CONSIDERATION: PRIVATE EQUITY
Another driver emerging more prominently this year is private equity investment. O’Neill notes that this type of investment can “bring fantastic innovation and a great solution to the market though companies acquiring others must [effectively] meld the companies together to generate innovation.” Petrie added the caveat that “while private equity has been a good thing for the American economy, from the perspective of running a growing business it’s been really interesting to watch how dynamic and efficient private equity is in getting capital to businesses that need it.[...] Once a company is mature and doesn’t need money to grow, then what happens is: private equity buys, they own the business for three years, and then they need to sell. If that process happens over and over again what you really see is a boom and bust of investment. You see money going in upfront and then you see a real focus towards the backend of that investment on just moving the profits up, so that business can be sold for the highest dollar.”
KEY CONSIDERATION: RETURN ON INVESTMENT (ROI) WITH RMIS
As with most technology investments, the glaring question of return on investment (ROI) emerges each year. Citing his experience, O’Neill mentioned that it typically takes 3-5 years to see a RMIS investment break-even; however, recent survey responses indicate this point can be reached in less than three years. He explained, “it does depend on what you want the RMIS to do for you. You will be able to cut down expenses and increase efficiency — especially with analytics. There is a quicker return because of technology, integrations, and the potential to do more.”
Petrie agreed and urged clients to think strategically when considering their definition of ROI. He provided the following example, “If a RMIS could analyze loss trends and where to reduce expenses - that’s one thing. But, with all these feature enhancements we’ve added on whole other topics, this is huge people saving and therefore cost saving.”
ADVISOR FINDINGS NOT INCLUDED IN THE 2021 REPORT
Near the close of the discussion, Tweedy and O’Neill revealed three bonus insights not published in the report. First, O’Neill noted that the expected RMIS buyer investment and budgeting in 2021 “would be up in risk technology by 10%, year-over-year,” indicating a catch-up to needed investment from years’ prior and maintaining benchmark to peers.
He also mentioned a second finding, “a third of the folks that were implemented in the last three years were brand new RMIS buyers.” He credits this to vendor technology ease of use and affordability and the buyers’ increased attentiveness to risk. Lastly, O’Neill comments that organizations are looking for “best in breed solutions” targeted to meet specific needs. It is cautioned that organizations may encounter difficulties when looking to have these systems speak to each other and while building an integrated approach to risk. It seems vendors are aware of this desire and are working diligently to secure partnerships to benefit customers, such as the industry partnership between Origami Risk and LineSlip.
As we continue to move forward in the industry, it’s clear that risk professionals are taking a front-seat role in determining the future of RMIS and risk technology. Additional findings and the full 2021 RMIS Report from Redhand Advisors can be accessed here. To view the full webinar, click here.