News
Economic uncertainty threatens growth
16 February 2012
Over two thirds (70 per cent) of insurance CEOs are planning on changing their strategy over the next 12 months as they try to see past the current difficult economic and regulatory backdrop. The 121 insurance CEOs surveyed for PwC’s annual global survey cite the current economic uncertainty as the greatest threat to growth in the short term, with 60 per cent saying the crisis has had a significant impact on their finances and will trigger changes to their strategy, risk management and operational planning.
Nearly half of insurance CEOs surveyed believe the economy will continue to get worse over the next 12 months. However, this does not seem to be dampening the sectors’ outlook for revenues as 90 per cent of those surveyed are confident they will improve.
Over-regulation and a lack of talent are however seen as a significant constraint on growth plans. These immediate concerns and a lack of certainty can be seen as holding back investment and business development within the insurance sector. Only 15 per cent of insurance CEOs said they are planning on carrying out a cross-border acquisition in the coming year.
Those companies looking to build their operations show a clear focus on the emerging markets, with nearly half of insurance CEOs saying emerging markets are more important than developed markets to their company’s future. More than 80 per cent of respondents said they plan to build up their operations in East Asia, South-East Asia, Africa and Latin America over the next 12 months, compared to less than 40 per cent in Western Europe.
‘The immediate pressures of market volatility and regulatory upheaval have left little space in boardroom agendas for insurers to think about how to remain competitive in the years ahead. It is vital insurers do not get blinded by the current challenges and set a clear vision for the future,’ says David Law, global insurance leader at PwC.
‘Growth opportunities exist, particularly in faster growing economies and from new technology developments, and those insurers that are able to respond to this changing risk landscape with innovative solutions will be rewarded by the way they are valued by customers and investors.’
Nearly 60 per cent of insurance CEOs see a shortage of skills as a significant threat to growth, the highest of any financial services sector. Around 30 per cent of those surveyed said they had been unable to pursue a market opportunity or have had to cancel or delay a key strategic initiative as a result of these talent constraints. This is forcing the majority of CEOs to reassess their talent strategy, with 20 per cent planning major changes.
Directory link: PwC
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