Insurance CEOs Stress Risk, Reputation: PWC

Insurance executives are taking a separate path to economic recovery than other sectors, adopting a more cautious outlook and taking more measures to protect their reputations, according to a global survey of CEOs.

As the economy picks up, the industry’s leaders also expect more pressure from regulators when it comes to reporting requirements, and put a greater emphasis on risk management than their peers, reports PricewaterhouseCoopers’ 13th Annual Global CEO Survey. Part of their concern stems from increased public scrutiny, the survey report notes: “Many of them are initiating a systematic approach to measuring and managing their companies’ reputations, engaging in a proactive dialogue with policy-makers and regulators, and participating in industry initiatives to improve the sector’s reputation.”

The vast majority of insurance respondents are focused on rebuilding trust in the wake of the recession: (77%) report taking a systemic approach to managing their reputation, compared to 51% of those in other sectors, while 86% report proactive dialogue with regulators and policy makers and other industry initiatives to improve the sector’s reputation, versus 63% and 64% of other respondents, respectively.

Cautious optimism

Although over two-thirds of CEOs in other sectors (72%) say an economic upswing has already begun or will do so by the end of the year, just 58% of insurance CEOs report similar optimism. They are even more cautious when it comes to this year’s financial performance: only 13% are confident that revenues will rise by the end of the year, compared to 31% of those in other sectors who think they will.

And as different jurisdictions move toward new capital requirements, insurance executives are bracing for stricter regulations and reporting requirements: 67% say requirements will be “moderately” or “significantly” harder going forward, while only 55% of other industry executives say so.

Focus on risk

But they’re putting the most emphasis on risk measures, the survey found. Significantly more Insurance executives (71%) are integrating risk management into their business units, versus 58% of other CEOs, and 65% are creating personal accountability frameworks for good risk management, versus 50% of non-insurers. More insurers (65%) are also engaged in risk-related information gathering compared to their counterparts (49%); and 60% are preparing for systemic risk and low-probability, high-impact events, versus 47% of other respondents.

The insurance industry respondents were more in line with the other respondents when it came to reviewing their risk appetite: 54% of insurance CEOs and 53% of other industry executives report that they are reassessing their risk tolerance.

The survey questioned over 1,100 global company leaders and government officials on their current outlook.