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Regulatory burden identified as top risk to insurance industry in global survey


June 9, 2011   by Canadian Underwriter


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The burden of regulation was identified as the biggest risk keeping the global insurance industry awake at night, according to a survey by the Centre for the Study of Financial Innovation and PricewaterhouseCoopers.
Insurance Banana Skins 2011 identifies the risks facing the global insurance industry in early 2011, as seen by a global sample of nearly 500 practitioners and close observers of the industry.
The wave of regulatory reform, both at the international and local levels, in particular Solvency II, was the top risk identified by the survey.
“The fear is that these initiatives will load the industry with heavy costs, and distract management from the task of running profitable businesses,” the report says.
“The central thrust of these initiatives is to improve the capital strength of insurance companies. But the scale of the new capital requirements [ranked as the second top risk in the survey] is such that the industry could end up being hindered by them rather than helped.”
Natural catastrophe risk surged from the 22nd spot in the 2010 Banana Skins report to Number 5. “A change which is to be expected after the recent disasters in Australia, New Zealand and Japan whose full impact on the industry cannot yet be measured, but is certain to be far-reaching.”
A glut of talent – both attracting and retaining high quality staff – also made an appearance in the Top Ten this year. “A problem that reflects the industry the world over, and may be an aspect of the mixed reputation it has in many markets.”


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