Insurance CEOs are more concerned than those in any other sector about the combined threats to their growth prospects from over-regulation, the speed of technological change, changing customer behaviour, and competition from new entrants, according to findings from PwC’s 20th CEO Survey.
But while this indicates that insurance is an industry most affected by disruptive change, insurance CEOs are fairly confident their companies can grow revenue over the next 12 months and they are among the readiest to embrace disruption.
Over-regulation continues to be the number-one concern for 95% of insurance leaders across the globe, the report said, noting that other threats are uncertain economic growth (84%), social instability (75%), geopolitical uncertainty (74%) and the future of the Eurozone (72%).
Fears around the speed of technological change have increased since last year, with 83% of insurance CEOs citing it as a threat to growth (up from 69%) and 28% saying technology will completely reshape competition in the industry over the next five years. Technological disrupters range from robo-advice to pay-as-you-go and sensor-based coverage.
New entrants to the market also continue to be perceived as a threat, with 65% of insurance leaders highlighting concerns about the competition they face.
While the cost and disruption of regulation continue to be industry leaders’ paramount concern, the sharp rise of concerns about shifting customer behaviour is particularly striking, the report said. In last year’s CEO Survey, 24% of insurance CEOs stated they were extremely concerned about changing customer behaviours, but this year saw a 21 percentage-point increase to 45%. To keep pace, insurance CEOs recognise that customer intelligence, along with the quality of the client insights and interactions that underpin it, is their most valuable asset and surest foundation for profitability and growth.
Optimistic about growth prospects
Despite soft premium rates, low interest rates, and subdued economic growth in many developed markets, insurance CEOs are optimistic about their own companies’ growth prospects. Over a third (35%) are very confident they can achieve revenue growth over the next year and more than 80% are at least somewhat confident.
PwC polled 95 insurance CEOs from 39 countries in the report, which also includes an industry summary “Embracing possibility, boosting innovation” looking at how insurers can emerge stronger from another pivotal year in the strategic and operational transformation of the industry.