Cyber risk among the top 10 concerns for insurers globally

Cyber risk tops the list of concerns for UK insurers, according to the annual ‘Banana Skins’ survey of perceived risks to the sector by the Centre for the Study of Financial Innovation (CSFI) and PwC.

The UK insurance industry shares the global concern about burgeoning regulation, particularly its cost and distraction, but also its potential to damage the international competitiveness of London as the world’s insurance capital if it is heavily “gold plated”.

By contrast, UK concern about the macroeconomic situation and the outlook for interest rates is much lower than the global average. The outlook for investment performance is also seen to be stronger by UK insurers.

The CSFI’s Insurance Banana Skins 2015 survey, in association with PwC, was conducted in March and April 2015 and is based on 806 responses from insurance practitioners and industry observers from 54 countries, to find out where they saw the greatest risks over the next 2-3 years

Most of the risks in the Top 10 centre on the rapidly changing insurance risk landscape and the new challenges facing the industry: cyber risk, the reshaping of distribution channels with the emergence of new technology and the demand for new-style products. The ability of the industry to handle these changes is, itself, seen as a high risk: “Change management” is the third biggest worry for UK insurers, and concern about the industry’s ability to attract talent is also higher than the global average.

Stephen O’Hearn, PwC global insurance leader, commented: “The long-term prospects for the insurance sector are positive as people around the world live longer and have more wealth to protect. Yet insurers also face the disruptive impact of new technology, changing customer expectations, more exacting regulation and enduring economic uncertainty.”

Mark Train, PwC global insurance risk leader, commented: “The ability to identify and manage emerging, as well as familiar, risks is at the top of the boardroom agenda and will be one of the key differentiators for success in a marketplace that offers considerable long-term opportunities, but also disruptive threats.”

Insurance Banana Skins 2015

World

UK