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Insurance CEOs Stress Risk, Reputation: PWC


April 9, 2010   by Terri Goveia


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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.

This story was originally published by Canadian Insurance Top Broker.