Most insurers expect business conditions to remain flat or even become worse over the next few years. Within that context, regulatory changes and continued low interest rates remain their top concern, a recent Towers Watson global outlook survey has found.
The survey looked at both property/casualty and life insurers. Towers Watson questioned 365 executives from insurance companies around the world, with a near-even split between property/casualty and life insurance companies.
Specifically, 60 percent of insurers project flat business conditions over the next few years, and 17 percent see negative growth ahead, according to the survey.
At the same time, 85 percent of North American insurers said they are worried most about interest rate risks. The numbers are better overseas, with 68 percent of European insurers and 61 percent of Asia Pacific insurers see low interest rates as a problem.
Regulatory anxiety also places high on the list. About 82 percent of European insurers see the issue as atop concern, as do 80 percent of their Asia Pacific counterparts. In North America, 65 percent of North American insurers saw regulatory changes as a major point of worry, the Towards Watson survey determined.
Regulatory worries are not a surprise, considering that Europe’s implementation of its Solvency II regulatory harmonization is about a year away, Graham Fulcher, Towers Watson’s EMEA p/c practice lead, said in prepared remarks. He added insurers should focus on other major issues that have more urgency, including adapting to big data and social media, and addressing the continued poor underwriting environment.
“That is part of the danger with an excessive focus on regulation,” Fultcher said. “It distracts insurers from spending adequate time on things that ultimately matter more.”
With insurers worried about global growth, it makes sense that multinational carriers have targeted emerging markets such as Latin America and Asia for future expansion, said Serhat Guven, Towers Watson’s North America p/c practice lead.
“But that is not a development that will come easily,” Guven added in prepared remarks. “European and North American Companies entering these markets must contend with significant differences in business practices, language and culture.”
With Asia a target for new insurance industry growth, it is perhaps unsurprising that Asia Pacific insurers are the most optimistic about growth prospects. About 52 percent of their numbers see expansion ahead, versus just 20 percent among their North American counterparts, and 18 percent in Europe.
Interestingly, 27 percent of life insurers are optimistic about growth. Just 18 percent of p/c executives showed positivity about chances for growth in the near future, according to the survey.
Source: Towers Watson