Download Insurance Banana Skins 2015 The Singapore results Insurers identify their top threats

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]
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