Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Insurance Banana Skins 2015 The Singapore results July 2015 Insurers identify their top threats PwC is proud to present the results from our biennial survey: Insurance Banana Skins, which examines risks facing the insurance industry and identifies those that appear most urgent to insurance practitioners and close observers of the insurance scene around the world. Conducted in March and April, the survey polled 806 insurance practitioners and observers from 54 nations to find out where they saw the greatest risks over the next two to three years. Singapore elicited 22 responses in the fifth such survey since 2007. Regulation Singapore’s response highlighted both country-specific risks and high-ranking global concerns. The source of most anxiety was regulation – in particular, how it compared with other countries in the region. A respondent from the non-life side said: “Our risks includes keeping up with the regulatory developments across jurisdictions developing at different paces within Asia. This is taking place in an environment where profits have thinned due to the excess capacity in the market”. Another warned that over-regulation “potentially strangles perfectly good and sound insurers from conducting good and sound business”, noting: “We work in several jurisdictions and we find the Singapore regulatory environment the most onerous by some measure”. Antony Eldridge, Financial Services Leader, PwC Singapore, comments: “Regulation is once again a prominent Banana Skin across the industry, ranking top in both Singapore and globally. The latest wave of regulatory change is not only creating huge operational disruption, but is also calling into question longstanding strategic certainties. Costs, prices and returns could soon become unsustainable if the changes aren’t managed effectively.” Cybercrime, Change Management and Natural Catastrophes Risks related to new technologies – cybercrime and change management in particular – were also prominent concerns. A life insurance respondent saw: “potential game-changers caused by new developments that encourage the growth of direct channel and web aggregators to help customer understanding of insurance products, and the role of social media in potentially replacing the role of insurance intermediaries”. A response from the reinsurance industry on cybercrime urged: “continual vigilance, investment and research is required in this area to stay ahead”. Human Talent Higher concerns: One much higher than average area of concern in Singapore was around human talent. “A lack of experienced talent in the industry is leading to an overall reduction in the quality of underwriting and protection both at the direct and reinsurance level”, warned one respondent, while another said: “With higher mobility and increased competition for talent, it is challenging to attract and retain good staff”. The interlinked risks of natural catastrophes and climate change also came well up the rankings. A reinsurance respondent asked: “Do insurers adequately account and price for the potential for claims 'demand surge' following catastrophes?”, noting: “Demand surge can add up to 20% - more in certain circumstances - to the cost of claims following a natural catastrophe.” • Human Talent: “Other financial institutions are competing for the limited talent pool,” especially in technical roles Billy Bennett, Insurance Leader, PwC Singapore, commented: “While Financial Services as a sector faces a war for talent globally, the situation has become more acute in the insurance sector in Singapore. Now more than ever, how insurance companies challenge, develop and motivate staff, as well as attract new talent and fend off the banking sector is critical. Having the right team to manage and grow your business will become a real differentiator. The Singapore results of Insurance Banana Skins are a wake-up call.” • Guaranteed products: “The level of guarantees are generally low”. • Reputation: “The industry needs to better embrace social media” • Natural catastrophes, climate change: “climate change in the face of urbanisation, population shifts to cities, under insurance and the consequent rise in the gap between insured and economic losses”. Lower concerns: • Macro-economy: “The threat is lower than compared to the 2008 financial crisis, and no single event may have a significant impact” • Long-tail liabilities: “Professional actuaries teaming with shrewd fund managers should do a good job in managing this risk” • Market conditions: “The insurance cycle is not the main driver or contributor to the current market woes”. Banana Skins Index How they rank Singapore World Regulation Regulation Human Talent Macro Economy The 2015 Banana Skins Index, which measures the level of anxiety in the industry, is at a record high globally despite the improving global situation. David Lascelles, survey editor, said: “The insurance industry faces enormous challenges in the growth of regulation, a difficult operating environment, and the looming threat of structural change. This is reflected in the negative sentiment behind this survey”. Singapore scored below average on the Banana Skins Index, implying a lower level of risk anxiety. About the survey Natural Catastrophes Interest rates Cyber risk Cyber risk Change management Investment performance This survey has been produced with the Centre for the Study of Financial Innovation (CSFI) in association with PwC. It is aimed at senior executives in the insurance industry and identifies the risks currently facing the global insurance industry. To the view the complete report, please visit our global website: www.pwc.com/insurancebananaskins Who to call .............................................................................................. Antony Eldridge Financial Services Leader +65 6236 7348 [email protected] Billy Bennett Insurance Industry Leader +65 6236 7368 [email protected] © 2015 PricewaterhouseCoopers LLP. All rights reserved. “PricewaterhouseCoopers” and “PwC” refer to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as an agent of PwCIL or any other member firm.