More than 90% of insurance executives are looking forward to revenues increasing over the next three years, PricewaterhouseCoopers said today
PwC's annual Global CEO survey polled 74 insurance leaders in 34 countries and found the proportion of industry leaders who believe that the world economy will pick up over the next 12 months has tripled since last year, up to 45% from 15% in 2013.
The consultants said this 'buoyant' outlook was further reflected in the fact that 59% of insurance CEOs plan to take on more staff over the coming year. But insurers can't simply rely on an upturn in the economy to take their business forward, PwC said.
The firm noted that insurers would face difficulties trying to sustain returns within the life and the pensions markets. These markets have experienced slow growth and demand has been impeded by low investment returns and customer 'disillusionment' in the wake of the financial crisis. To that effect, more than 70% of insurance CEOs are concerned about slow growth or negative growth in developed markets and the impact of governments' response to fiscal deficits and debt burdens.
PwC's David Law said: 'Although the global economy remains fragile, immediate pressures are beginning to ease, allowing CEOs to shift from "survival mode" to "growth mode".
'Insurers face the challenge of how to capitalise on the growth potential created by a wealthier and longer-living global population, while grappling with the accelerating and potentially disruptive impacts of new technology, regulation and fast-changing customer expectations.'
Subsequently, the survey raised some questions about whether insurers were doing enough to keep pace with the 'shake up' in the marketplace. PwC noted that the industry needs to be able to respond to these trends to take advantage of the opportunity provided by people living longer, pension deficits and the increasing need for protection.
The poll alos showed that 80% of insurance bosses believe too much regulation is the barrier to growth, while 86% said technological advances would transform their businesses over the next five years.
Taking this into consideration, 40% of insurers have taken concrete steps to upgrade talent, technology, distribution, data analytics and innovation capacity, PwC found.
Law added: 'Insurers that are slow to respond could quickly lose business to more agile and innovative and, potentially, new competitors.
'The successful insurers will be first movers; even fast followers could end up being marginalised. The leaders will have clear insights into how the marketplace is evolving, where they're best able to compete, and be able to respond quickly to challenges and opportunities. They also will use the latest developments in technology to improve customer profiling, reduce costs, and improve the customer experience.'