Crisis will ‘shape insurance’ for decade

The impact of the financial crisis is the biggest risk facing the insurance industry and is “likely to shape the industry for the next decade”, according to a new report from Ernst & Young.

In the Second Annual Business Risk Report – Insurance 2009, model risk and regulatory intervention rank second and third among the top ten risks. Others listed include: mismanaging the cycle – the main cause of insolvency in non-life insurance – geopolitical shocks, demographic shifts in core markets, emerging markets which could be subject to rapid and unexpected deterioration, risks in investing in multi-distribution strategies, legal risks, followed by climate change and catastrophic events.

“As a result of the current economic conditions, there have been significant changes in the risks since the release of our 2008 report,” said Peter Porrino, global director of insurance in Ernst & Young’s global insurance centre.

“As insurance companies continue to navigate their way through this downturn, they should be focusing on changing their approach to risk management, regulatory analysis and the communication of risk information.”