In answer to issues faced by the banking industry, the insurance industry’s approach to risk-control is becoming more meticulous and regimented.
According to Global Insurance Leader Shaun Crawford the “size of the prize” has never been larger, and insurers prepared for the challenges ahead will come out on top’.
The industry is slowed down as international regulators are not working together to synchronize risk-based capital ruling. The market continues to be frustrated by lengthy delays with Solvency II and similar challenges.
Accounting principles are another significant barrier. There is much apprehension regarding systemically important insurer (GSII) status and the Financial Stability Board’s (FSB)designation.
Several opportunities are obvious for the long term which are worthy of attention in a highly competitive market. Issues to consider are the increase in wealth being transferred from generation to generation and a greater acknowledgment that state and private pension schemes are too expensive.
Significant opportunities are resultant from these issues, but most distribution models are not competent to meet customer expectations. Consumers want the availability of a mixture of digital and personal communications with their insurers, as well as clarity of costs and services.
- · Noteworthy changes occurred in Bancassurance during the past year.
- · A large financial institution and a Dutch multinational financial services company sold many of their international companies.
- · A large Spanish bank has embarked on some joint venture deals globally.
- · Indian and Chinese joint ventures produced mixed results as foreign investors struggle with cultural differences and to cope with local regulations.
- · A huge drop in the purchase of savings and investment products happened in the UK, according to the Retail Distribution Review (RDR).
- · Advisers are battling to cope with a non-commission sales model.
- · Global regulators are studying distribution carefully as they are seeking market remedies.
Improved systems and processes
In the competitive property market, providers are focusing progressively on reducing combined ratios with expense base cuts.
New claims processes and policy systems are being developed, with greater off shoring and shared-service structures.
Specialty risks are receiving attention and require visibility of any abnormal profits or risks.