Insurance executives expecting to experience growth in next 12 months- KPMG & EIU
A recent survey by KPMG International and the Economist Intelligence Unit of 315 industry executives from 49 countries in March and April 2009. show that more than half the respondents expect an improvement in organic growth (55 percent) and expect an improvement in growth by acquisition or take-over (53 percent) during the next 12 months. Respondents are also positive about their business prospects as they relate to premium volume (say 53 percent), expense ratio (say 53 percent) and capital reserves (say 47 percent). They are least positive about their share price, with only 40 percent of respondents expecting to see an improvement in this area.
Concern over the impact of the weakened economy, and particularly the capital markets, is further evident in the increased focus that insurance companies are placing on risk management. In fact, 81 percent of respondents have increased the level of priority they place on market risk in the past 12 months. Credit risk has the next biggest increase in priority, according to 79 percent of respondents. While these were the largest increases in priority, at least two-thirds of respondents had increased the priority of all core business risks, including aggregation of risk at a firm-wide level, operational risk, economic capital risk, underwriting risk and stress testing.
In terms of drivers for an insurance company’s capital requirements, current and future regulatory requirements were cited by over 80 percent of respondents. Respondents considered these to be by far the most significant drivers, ahead of internal management requirements, credit rating, market (shareholder) expectations, debt-holder requirements and share price.
Fifty-three percent of respondents say that their companies will increase investment in risk management related resources over the next year,
The top three areas for investment in is area are training (say 38 percent), processes and policies (say 37 percent) and information technology systems (say 36 percent).
Fifty-three percent of respondents say that their companies will increase investment in capital management related resources over the next year, The top three areas for investment in this area are processes and policies (say 38 percent), information technology systems (say 35 percent) and risk governance (say 32 percent).
The top three activities in which the risk management function plays an active role are new product development (say 82 percent of respondents), strategy development (say 73 percent of respondents) and pricing (say 70 percent of respondents).
(Source- Press release of KPMG of 4th September 2011)
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