Insurance CEOs see technological change, new market entrants and over-regulation as the main threats to growth, according to PwC’s 19th Annual Global CEO Survey.
PwC said insurance is one of the top three most disrupted sectors – with only the entertainment and media sector is facing potentially greater disruption.
The report shows that insurance CEOs are significantly more concerned about the threat posed by new market entrants than their banking and asset management counterparts.
- 69% of insurance CEOs are concerned about the speed of technological change in their industry
- 64% are concerned about the shift in consumer spending and behaviour
- A total of 94% of insurance CEOs are also concerned about over-regulation in the sector impacting growth.
Technology is the trend that insurance CEOs see as most likely to transform stakeholder expectations in the next 5 years, said PwC.
As a result, the report notes more than 70% of insurance CEOs are making significant changes to the way they use technology to assess and meet stakeholder changes.
Insurance CEOs also cite data and analytics as providing the greatest potential contribution to improving stakeholder engagement
Jonathan Howe, UK insurance leader at PwC, commented: "The customer-led shake-up experienced within the entertainment and media sector gives insurance CEOs a good idea of what lies ahead for them. Insurers are beginning to realise they have nowhere to hide and new market entrants will take margins – the technological revolution is here and insurers need to work with and learn from the innovative start-up companies already operating in this area."
He added: "The relationship an insurer has with their customers is currently curtailed by the limited interactions they have. By properly analysing and understanding their data insurers have the opportunity to create an outside-in view and ultimately offer their customers more tailored, valuable and relevant insurance policies. They are also more than aware of the added challenges that regulation and cyber security pose to getting their data policies correct."
The report’s release comes at a time when individuals and businesses around the world are looking to insurance companies to help them manage the increasing risks they face.
PwC said insurers are therefore uniquely placed to find an opportunity to provide improved risk analysis, advice and protective coverage in this wider business environment.
As such, it said 64% of insurers are looking to change the way they define and manage risks in response to changing stakeholder expectations.
Stephen O’Hearn, global insurance leader at PwC, commented: "Other industries will be looking to insurers to help manage increasingly complex and uncertain business and geopolitical risks. To capitalise on these opportunities, insurers need to embrace new ways of working, novel ways of interacting with customers, and alternatives to traditional products and services."
LII industry survey
Life Insurance International conducted its own industry survey in 2015 – with the next one scheduled for April 2015. At the time, over 60% of respondents to LII survey said they expected life insurance sales to rise over the next year – with term life
assurance likely to the most popular protection product.
A lack of customer awareness about life insurance, however, was cited by 56.25% of respondents as the greatest threat to their businesses.
Commenting on the LII 2015 industry survey, Deepak Jobanputra, deputy CEO at Vitality Life, welcomed the positive sentiment at the time among survey respondents, but questioned what will drive the increase in life sales.
He said: "Insurance needs to modernise to remain relevant in the consumer’s mind. This requires a number of components: awareness, value and convenience."
Richard Sadler, head of proposition development for retail protection at Zurich, told LII that although brokers and agents are the
dominant channel for life sales, mobiles and tablets are growing as a customer engagement channel and "at some point" will become the dominant channel for consumer engagement.
Ian McKenna, director of London-based Finance & Technology Research Centre,told LII at the time: "Consumer behaviour is
evolving rapidly and people are embedding mobile phone and tablet technology in every aspect of their lives. However, the [life] industry is dominated by baby boomers at a time when their core audience has moved on."