Insurance executives believe regulation will ultimately be positive for the industry, according to new KPMG survey

  • Regulation may hinder short-term growth, but provides opportunities for important and strategic business change

 

Insurance executives believe that regulation will ultimately create a stronger, more stable industry, as it encourages the drive to strengthen capital and risk management according to KPMG International's recent global industry survey, "Getting the right balance: Capital, risk and regulation in insurance”.

UK respondents feel that regulation, and more particularly the increasing requirements for, and cost of, capital will most significantly affect their profitability over the next three years (52%), but are quite positive about the impact of regulations like Solvency II on capital management (48%), risk management (59%) and encouraging a longer-term view of the business (45%).

Rees Aronson, Insurance Partner at KPMG LLP said:
"The twin drivers of regulatory change and internal pressure to improve business performance are encouraging companies to strengthen their risk and capital management structures and processes. So, while regulatory change may keep insurance executives up at night, it is business effectiveness and future viability that are really driving changes to risk and capital management.”

More specifically, UK insurers see improving risk-based decision making (55%), using capital more effectively (48%) and complying with regulatory changes (29%) as their top three priorities for strengthening risk and capital management between now and 2012. In terms of investment over the next three years, UK insurers expect to focus on recruiting and training the right people (26% and 19%, respectively) and improving process (16%).

Other findings of the survey include:

  • The top four priorities for the leadership teams of insurance organisations over the next three years are a focus on core business (36%), launching new products and services (36%), diversifying into new geographical areas (29%) and divesting non-performing assets (29%).
  • UK respondents feel that China and East Asia will see the strongest growth for the insurance industry over the next 12 months (36%), followed by the UK (23%). Global respondents, however, feel that India and South Asia will be the region with the second strongest growth (33%).
  • The top three steps UK insurers expect to take between now and 2012 to improve the management of risk are to improve the quality of risk reporting (55%), strengthen risk representation at board level (52%) and increase involvement of risk function in strategic business decisions (48%).


Tuesday 10 November 2009


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To download a full copy of "Getting the right balance: Capital, risk and regulation in insurance” please visit http://www.kpmg.com/.


For further information please contact:
Leah Dering-Ridley, PR Manager - Financial Services, KPMG in the UK
Tel: +44 (0)20 7311 6271; Mobile: +44 (0)772 575 3474; E-mail: leah.dering-ridley@kpmg.co.uk
KPMG Press Office: 0207 694 8773

About the study
KPMG's survey "Getting the right balance: Capital, risk and regulation in insurance”, summarises the perspectives of 392 industry executives from 47 countries and was conducted in August and September 2009. It investigates the expectations of insurance executives in terms of their companies' growth prospects and priorities through 2012, with particular focus on risk and capital management functions. 31 respondents were from the UK, with 84%  representing insurance organisations with annual revenues of USD500 million or higher.

About KPMG
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with 11,500 partners and staff.  The UK firm recorded a turnover of €2.2 billion in the year ended September 2008. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 148 countries and have more than 113,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International, a Swiss cooperative. KPMG International provides no client services.


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