Canadian insurers perceive regulation and the macroeconomic environment as two of the top 10 risks to their businesses this year, according to a new report.
PriceWaterhouseCoopers published this finding in a July survey, “Insurance Banana Skins 2013: The Canadian Results.” Produced in collaboration with the Centre for the Study of Financial Innovation for senior insurance industry executives, the PwC survey identifies risks facing the global insurance industry. The report includes insights from more than 660 insurers, regulators and industry-watchers across 54 countries.
“The industry faces increasing regulatory demands without due consideration to the costs and practical business ramifications of the changes being made,” the report states, quoting one survey respondent.
“Market conditions are sufficient to promote rate control, without arbitrary political interference, which will likely cause more harm than benefit to the insurance companies and, ultimately, the end consumer,” the survey respondent adds.
The report also notes that Canadian insurance executives are more concerned than their counterparts worldwide about the liabilities of insurance products and about “new risk entrants” like innovation and social media. However, the respondents evince less concern over institutional issues, such as the quality of management and governance; and with business practices.
When asked how well prepared their companies are to handle the risks they identify in the survey, the Canadian executives score on average 3.12 (1=poor, 5=well), slightly more than the 2.95 score recorded for insurance executives worldwide.
“For risks related to economic, investment and reinsurance”—or risks that can be modeled—“the insurance industry is prepared,” the report states, quoting another respondent. “For risks related to social media, management, etc.”—risks that cannot be modeled—“the risk is higher.”
To view the complete PwC report, click here.