March 14, 2008 by Canadian Underwriter
Potential climate change is the greatest strategic risk currently facing the property and casualty insurance industry, according to an Ernst & Young report. Demographic changes and catastrophic events follow closely behind.
For the study, Strategic Business Risk 2008, Ernst & Young and Oxford Analytica interviewed more than 70 industry analysts from around the world to identify the emerging trends and uncertainties driving the performance of the global insurance sector over the next five years.
The Top 10 risks identified were: climate change; demographic shifts in core markets; catastrophic events; emerging markets; regulatory intervention; channel distribution; integration of technology with operations and strategy; securities markets; legal risk; and geopolitical or macroeconomic shocks, a release says.
Many of the risks are interlinked, a company release notes, and raise questions about how these risks will change what companies offer customers, the way that they offer their services and where.
The analysts identified five additional emerging risks (not part of the Top 10) that have the potential to become as significant during the next five years.
These include: over reliance on model-based risk management; threats to industry reputation; losing the war for talent; increasing exposure to global regulatory heterogeneity; and the possible emergence of entirely new risks.