Brexit is not a key concern of the insurers as the sector is most worried about being tripped up by operational risks such as rapidly evolving markets, rising customer expectations and cyber security threats.
Regulatory risk, which has historically been a top headache for insurance, is no longer as pressing.
The findings came from a global report called “Insurance Banana Skins 2017” prepared by the Centre for the Study of Financial Innovation (CSFI) and PwC.
Global risks resulting from the UK’s decision to leave the EU are of a “small order” the report found. It said: “Brexit came last by a long way in the rankings.” Brexit was seen as more of an issue in Ireland than in the UK.
Lloyd’s of London revealed plans to set up an EU base in Brussels earlier this year. Some of the 836 respondents across 52 countries highlighted Brexit will create “technical problems”.
The report said: “But even here, many respondents felt that sense would prevail. A UK insurer said that ‘Some damage is inevitable, but probably overplayed. There's a lot of mutual interest in maintaining free access to one another's markets’.”
However, overall concern about the future among insurers was high, with general concerns that the sector climate is becoming “more challenging”.
The biggest concern was change management, which failed to feature in the top five the last time the report was produced in 2015. Respondents told CSFI the insurance industry was “glacially slow in its response to change”.
Survey editor David Lascelles said: “For the first time in six editions of this survey, operating risks pose the greatest threat to insurers. Structural and technological changes to the industry could upend traditional business models.
At the same time, insurers are grappling with a very difficult economic climate, which helps explain why anxiety is at an all-time high.
PwC global insurance risk leader Mark Train said: “Both the challenges and opportunities presented by change underline the vital importance of being clear about where you’re best able to add value, and then being ruthless in targeting investment and management time at these priorities.”
Insurance Banana Skins 2017
|Rank (2015 ranking in brackets)||Risk|
|1 (6)||Change management|
|2 (4)||Cyber risk|
|4 (3)||Interest rates|
|5 (5)||Investment performance|
|9 (15)||Human talent|
|10 (7)||Guaranteed products|
|11 (16)||Political interference|
|12 (11)||Business practices|
|13 (-)||Cost reduction|
|14 (12)||Quality of management|
|15 (10)||Quality of risk management|
|16 (20)||Social change|
|18 (17)||Product development|
|19 (21)||Corporate governance|
|20 (22)||Capital availability|
|21 (25)||Complex instruments|