Insurers concerned they are not evolving quickly enough to be
relevant to future generations
ARLINGTON, Va. -- (Business Wire)
Insurers across the world say regulatory changes and sustained low
interest rates will continue to be their primary environmental
challenges over the next one to three years, according to a new insurance
industry outlook survey conducted by global professional services
company Towers Watson (NYSE, NASDAQ: TW). While these near-term
environmental challenges stand as insurers’ top concern (62%), they also
express worries about more fundamental issues such as whether their
business models will hold up to new and emerging risks (27%).
North American insurers exhibited more concern over interest rate risks
(85%) than their European (68%) and Asia Pacific (61%) counterparts,
while anxieties over regulatory changes resonated higher with European
(82%) and Asia Pacific (80%) insurers than with their North American
(65%) peers. Life and property & casualty (P&C) insurers had similar
takes on the main environmental challenges, with the exception of
climate change, which no life insurer ranked as a risk.
“With Solvency II implementation a year away, it’s not terribly
surprising that regulation ranks top of mind for global insurers,” said
Graham Fulcher, Towers Watson’s EMEA P&C practice lead. “However,
disproportionate short-term focus on regulation is a long-term cause for
concern at a time when insurers have many emerging challenges to think
about, such as the opportunities of big data and social media, and the
poor underwriting environment. That is part of the danger with an
excessive focus on regulation: It distracts insurers from spending
adequate time on things that ultimately matter more.”
Most insurers project business conditions to remain flat (60%) or
possibly even enter a period of negative growth (17%) over the next
three years. Asia Pacific insurers are the most bullish on growth
prospects (52%), significantly more so than North American (20%) and
European (18%) insurers. Life insurers (27%) showed more optimism than
P&C executives (18%) concerning growth. Nearly two-thirds (63%) envision
the most likely prospects for growth coming principally through organic
means.
“The general projection for global insurers over the next few years is
for nominal growth, and that’s likely why multinationals have targeted
Latin America and Asia for future expansion. But that is not a
development that will come easily. European and North American companies
entering these markets must contend with significant differences in
business practices, language and culture,” said Serhat Guven, Towers
Watson’s North America P&C practice lead.
Survey respondents said technology (88%) and talent-related issues (78%)
are their top resource challenges. “In Asia, some companies are
establishing internal innovation centers to become market disruptors
before they get disrupted, and more insurers might want to consider this
approach,” said Michael Freeman, Towers Watson’s Risk Consulting and
Software lead, Asia Pacific. “Talent-wise, success and failure often
depend on your workforce. Insurers that have the right mix of talented
people are more likely to succeed.”
Insurers also reflected on the primary opportunities and threats to
their business. Beyond regulations (57%), other emerging opportunities
or threats included changing distribution channels (47%), the pace of
innovation (39%), big data (30%) and social media (9%). “There are
numerous emerging opportunities that insurers can capitalize on to grow
their business,” said Guven. “However, in many cases, companies react
with incremental changes rather than taking more radical steps. Many
insurers in our survey are now questioning whether this approach will
enable them to keep pace with the market.”
About the Survey
Towers Watson conducted its global survey of insurance companies with a
total of 365 executives, representing all regions of the world, and a
fairly even split between life and P&C.
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global professional
services company that helps organizations improve performance through
effective people, risk and financial management. With 15,000 associates
around the world, the company offers consulting, technology and
solutions in the areas of benefits, talent management, rewards, and risk
and capital management. Learn more at towerswatson.com.
Contacts:
Towers Watson
Josh Wozman, +1 703-258-7670
josh.wozman@towerswatson.com
Source: Towers Watson
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