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Insurers in India perceive managing changes in the sector as the top risk to their business. The Insurance Banana Skins 2015 survey, conducted by Centre for the Study of Financial Innovation (CFSI) — a non-profit think-tank, in association with PwC — said regulation came in the bottom of the risk rankings in India.
A total of 800 insurance practitioners and sector observers in 54 countries (including India) responded to the survey. The purpose was to find where insurers saw the greatest risks over the next two to three years. The economic environment was also a lower order concern, with positivity about India’s growth and inflation under control.
This is in contrast to the overall global findings, where regulatory concerns emerged as the overall top risk for participants in the survey for the third successive time, underlining the deep impact regulatory change has.
Anuraag Sunder, director, PwC India, said, “Respondents from India perceive regulation as the least important risk and this could only be a reflection of the new reality where post the FDI (foreign direct investment) changes, the sector has accepted the new set of regulations as the ‘new normal’. They are now more focused on ‘change management’, which is ranked as the top business risk.”
He said fast-paced changes on ever-evolving customer side and increasing demand of digital interface is also a reflection of ‘change management’ that insurers would need to walk through.
Cluttered at the top are financial risks (exposure through long term liabilities and investment performance) and human capital risks (quality of management and human talent), signifying lack of confidence in the talent pool, Sunder added.
As India’s customers continue to adopt technology in a big way, adapting to their ever-evolving expectations, especially from a technology standpoint was high on the priority list of the respondents. On the non-life side, the absence of any common data platform to make informed decisions was an area of concern.
The survey showed technology was widely seen as the driving force behind new markets, changing customer demand, and facilitating competition from non-traditional entrants. While the need for insurers to respond to change is nothing new. Many respondents saw the current challenges demanding special urgency.
The concern raised was that the traditional insurance sector might be slow to grasp the opportunity and will end up facing a threat. Developments such as digitisation, the internet and social media are already influencing price and demand for insurance products, and the means customers use to interact with their insurance providers.
