Insurance revenues will increase over the next three years, according to 92% of insurers’ chief executives (CEOs) surveyed by PwC in its 17th annual
“The insurance business in general is a business that grows as the economy grows. At the end of the day, it’s only when our customers do well that we do well, because we are the business that makes transactions possible in the world of commerce,” said Dinos Iordanou, chairman, president and CEO of Arch Capital Group.
The number of CEOs who said they expect the global economy to improve in 2014 tripled to 45% from 15% last year, while 59% said they plan to increase staff over the coming year.
“Although the global economy remains fragile, immediate pressures are beginning to ease, allowing CEOs to shift from survival mode to growth mode,” said David Law, global insurance leader at PwC. “Insurers face the challenge of how to capitalize on the growth potential created by a wealthier and longer-living global population, while grappling with the accelerating and potentially disruptive impacts of new technology, regulation and fast changing customer expectations.”
Half of the CEOs surveyed regarded new entrants into the insurance sector as a threat to growth, while asked to name the biggest growth opportunities, 47% said an increase in their share of current markets, while 26% said product and service innovation. Too much regulation was cited as a barrier to growth, by 80% of CEOs.
Technological advances will transform their businesses over the next five years, according to 86%, although more than 60% regarded the speed of technological change as a threat to their companies’ growth prospects.
Insurance CEOs said the five trends that could transform the industry over the next three years are technological advances such as the digital economy, social media, mobile and big data (86%); demographic shifts (73%); shifts in global economic power (55%); resource scarcity and climate change (36%) and urbanisation (32%).
Fewer than 40% said they had taken concrete steps to upgrade talent, technology, distribution, data analytics and innovation capacity, while 31% said they have completed, or are executing, change initiatives in data management and analytics.
“Developments that would have taken years to affect the market in the past can now do so in a matter of months,” said Law. “Insurers that are slow to respond could quickly lose business to more agile and innovative and, potentially, new competitors.
“The successful insurers will be first movers; even fast followers could end up being marginalised. The leaders will have clear insights into how the marketplace is evolving, where they’re best able to compete, and be able to respond quickly to challenges and opportunities. They also will use the latest developments in technology to improve customer profiling, reduce costs, and improve the customer experience.”
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