Changes to regulation, including new Solvency II rules, are greatest threat to firms, according to PwC survey
The impact of regulatory reforms was named in a PwC survey as the number one concern for the insurance industry in 2013.
The PwC’s Insurance Banana Skins survey polled 600 insurance practitioners and industry observers, who warned that proposed changes to the regulatory landscape, such as Solvency II, could swamp the industry with costs and compliance issues.
Regulation also topped the list when the poll was last conducted in 2011.
Investment performance was the second biggest issue, followed by the impact of the economic environment.
Mis-selling was also high on the list of concerns, at fourth place, and the risk of natural catastrophes completed the top five concerns.
PwC global insurance leader David Law said: “Once again regulation is the number one risk. The fragile economic environment and subdued investment performance also remain high on the list of concerns. Managing these challenges is clearly a critical boardroom priority.
“But there’s a risk that by solely focusing on these recurring issues insurers could miss other threats and opportunities coming up over the horizon. The industry faces transformational shifts in technology and customer expectations, which are reshaping how insurance is sold, how risk is priced and even what we mean by insurance.”
PwC’s Insurance Banana Skins polled the top 20 risks for insurers (2011 rating in brackets):
1 Regulation (1)
2 Investment performance (4)
3 Macro-economic environment (3)
4 Business practices (18)
5 Natural catastrophes (5)
6 Guaranteed products (-)
7 Quality of risk management (15)
8 Quality of management (14)
9 Long-tail liabilities (7)
10 Political interference (11)
11 Distribution channels (9)
12 Actuarial assumptions (12)
13 Innovation (-)
14 Reputation (16)
15 Change management (-)
16 Capital availability (2)
17 Corporate governance (8)
18 Climate change (20)
19 Human resources (6)
20 Product development (24)