Focus on the emerging risks for the legal function in an insurance company

The role of the legal function encompasses the inherent challenge of understanding the business in depth to provide the service that our client requires without compromising the independence of our advice.

Today investors, regulators, employees and communities, in general, expect corporate leaders to consider their purpose and how their actions may impact the environment and society. Companies should serve a social purpose aiming for long-term sustainability, and ethical behaviour is critical to that end. Hence, it is essential that we also consider the social and political environment and consider how that may end up impacting the way that we do business.

Besides acknowledging the complexity of the current environment and expectations set upon companies, there are specific industries – like insurance – that, no matter where they are developed, are highly regulated. The challenge for the legal function and general counsel to help the business appropriately in an insurance company requires that the legal team is permanently updated on the latest regulatory trends not only at the local level but at regional and sometimes even on a global basis. In recent years some of the increasing trends of new regulations are those related to market conduct, transparency, consumer protection, privacy, solvency, ESG and growing expectations in applying a risk-based approach in the decision-making process.

Having that visibility on sustainability matters and regulatory issues, as emerging risks, allows us to anticipate and adapt processes based on those trends to support different business areas in adjusting to a new environment that considers new sensibilities and mitigates risks. In that position, we provide insights to the board and management and work in alignment with other functions to ensure proper consideration of those matters in the creation of products, in the rendering of service, and changes of processes; but also, by helping with the design and implementation of systems and controls to manage, mitigate or remove risks.

Being part of a multinational company has certain benefits, given that we may provide visibility of local realities and share experiences with our peers in other operations. We do that in the legal teams in the Andes and also with the legal teams around the globe. Due to the above, we have realised that even though we instinctively think there may be many differences in each country, there are many more similarities than we would have thought. The focus of regulators is quite similar everywhere. Once certain regulations are enacted in certain markets, similar regulations – with the same principle – will be passed soon after in others.

In that regard, in Liberty Mutual, we share and use that experience among the legal teams trying to anticipate. We raise opportunities, successes, and potential difficulties. We learn from each other so that if other teams face similar situations, they may know the challenges and what to do to overcome them.

With that, we have become a more effective legal team to support the business with comprehensive advice that nowadays goes beyond purely legal considerations. We are constantly looking for new ways and opportunities to improve our guidance.