Technological advances and changing customer behaviours are hitting the insurance industry hard and are reflected in the top 10 risks New Zealand insurers have identified in PwC’s latest report, Exploring the insurance industry’s top risks: A New Zealand perspective.
Change management, distribution channels, cyber risk, human talent and social change risks are all named in the top 10 risks.
PwC Insurance Sector Leader Karl Deutschle says the industry is at the tipping point as it grapples with the impact of new technology, new distribution models, changing customer behaviour and more exacting local and global regulations.
These findings are consistent with this year’s PwC Global CEO Survey where insurance industry leaders across the world told us (more than any other commercial sector) that their businesses were facing disruption.
“For some businesses, technology developments are a potential source of disruption and yet for others, change offers competitive advantage,” Deutschle says.
“Technology is one of the driving forces behind competitive advantage for new and non-traditional entrants, enabling their ability to quickly respond to customer demands.
“Customers want insurers to offer them the same kind of accessibility, understanding of their needs, and products that fit their requirements that they’ve become accustomed to from online retailers and other highly customer-centric sectors.
“Digital developments offer part of the answer by enabling insurers to deliver anytime, anywhere convenience; streamline operations; and reach untapped segments.”
Natural catastrophe risks again topped the list, as it did two years ago.
Yet nearly five years on from the Canterbury earthquakes, the emphasis has shifted more to reputational damage.
Recently this risk has increased further with a rise in both the intensity and frequency of weather-related events.
“Many insurers are looking at how they can settle claims more quickly and effectively in the event of a natural catastrophe,” Deutschle adds.