By Patrick O’Neill, Founder and President, Redhand Advisors
From cyber incidents to business interruption, natural catastrophes and supply chain, the magnitude of business risk in 2022 is truly unprecedented.
The good news is, Risk Management Information Systems (RMIS) are rising to the challenge.
The RMIS Market continues to evolve at a rapid pace. More organizations are utilizing RMIS than ever before.
Not surprisingly, U.S. businesses make up the largest percentage of RMIS users, representing 80% of the market. The United Kingdom/Europe, Asia Pacific and Latin America are ripe for growth in 2022 and may even outpace U.S. growth over the next few years. As the utilization of RMIS continues to move beyond just claims, the international market will accelerate its RMIS adoption.
4 Current RMIS Trends
As business risk increases so does the need to understand where the industry is headed. Here are four key RMIS market trends we are observing in the market:
1. Vendors are pushing the envelope of what’s possible in your RMIS. We continue to see expansion in the capabilities that a RMIS provides and supports. This expansion is taking many different forms including traditional product development expansion as well as growth through private equity (PE) activity.
PE activity has helped RMIS providers grow, adding new and additional offerings to their portfolio of capabilities. In many cases PE investment has spurred the M&A activity, allowing RMIS businesses the opportunity to add complementary capabilities that organizations are demanding, resulting in an overall broader RMIS solution for customers.
Bottom line: RMIS offer significantly more capabilities and address much broader risk issues than they have in the past. Large vendors are buying up smaller solutions to complement their offering, with an adjacent business. Vendor consolidation has allowed for increased investment in product development.
2. Risk takes center stage as a business driver. Business risk has historically been managed in a series of silos — each business unit for itself. That’s no longer viable. More businesses now recognize the benefit and importance of organizing all business risk under a single umbrella within the organization. Now a board-level topic and no longer just a line item in your budget for insurance coverage, risk has a significant impact on your business’ bottom line.
This has led to a new form of a risk management aptly called: integrated risk management. RMIS systems are expanding — if they haven’t already — to do more than just claims. Integrated risk management solutions have increased capabilities from claims management and administration, policy and incident management to now include governance, risk and compliance (GRC); environmental, health and safety (EH&S); third-party risk management and more.
Bottom line: Within organizations, the traditional buyer has historically been the risk/insurance professionals or claims professionals. While that remains largely true today, there has been an expansion to new buyers to include the compliance, safety, enterprise risk, information security, internal audit and more.
3. Tech innovation means more integration. The SaaS platforms of today’s RMIS systems make integration with third-party tools — from mobile devices to wearables and other niche solutions – possible. Tech integration makes it easy to collect and analyze more data, do it better and deploy additional solutions.
The top RMIS vendors now provide these capabilities or have integrated third-party SaaS solutions into their RMIS for the most optimal tech integration. The question is: Do you need a new RMIS or can you just configure your existing RMIS? You can find the answer here.
Bottom line: RMIS systems are more meaningful when they can be integrated with new tech that lend a window into a greater picture of your business’ overall risk. These integrations are being leveraged on an increasing basis.
4. Increased RMIS adoption — and will continue to do so. The RMIS market has traditionally been filled with large, Fortune 1,000 public or private self-insured entities. Over the last few years, the RMIS customer has expanded to the middle market and organizations that traditionally didn’t require a RMIS.
Why? For one, the cost of RMIS has come down and is therefore more accessible to more organizations. Additionally, as mentioned in #2, the significance of risk in organizations has grown. It’s no longer just large organizations that need an efficient way to manage their risk. For these reasons, the number of first-time RMIS purchasers are growing rapidly. In fact, one RMIS provider says over 50% of their 2021 new business came from first-time buyers.
Bottom line: RMIS adoption continues to increase. Insurers, third-party administrators (TPAs), brokers, managing general agents (MGA) and risk pools all utilize a RMIS to manage their business on behalf of their clients.
How does your RMIS fare in 2022?
The way your RMIS system responds and engages with these market trends will play a hand at determining how your business will ultimately fare in 2022. Take a page from our analysis and determine what you want to get from your RMIS. We’re all anxiously awaiting your next move!