Survey suggests insurers are vexed by increasing risks
Lloyd’s of London, one of the world’s largest providers of insurance and reinsurance, has released the results of its latest survey concerning the global insurance industry. The survey indicates that many of the world’s leading insurance executives are becoming increasing concerned with reputational risk and insurance regulations. These concerns are spurring new actions from insurance companies, including the offering of new policies and, in some cases, the abandonment of some markets or refusal to provide coverage to controversial organizations.
Stricter regulations pose a daunting challenge
The survey was presented at this year’s Risk and Insurance Management conference in Philadelphia. Lloyd’s claims that the survey is meant to illustrate the status of the insurance landscape and how it is being affected by economic issues and recent changes in politics. Lloyd’s suggests that regulation is the most challenging trend facing the global industry presently. New regulations, such as those enacted in the U.S. regarding health insurance, are making it difficult for some companies to do business. Many of these regulations are designed to be consumer friends. As such, companies have had to change their underwriting practices in order to comply with the whims of governments. The survey shows that 76% of respondents believe that regulations are an issue, but that the industry will see little legislative action due to upcoming elections.
Reputation and cyber liability are causes for concern
Exposure to reputational risk was cited as a primary concern as well. The survey shows that 61% of respondents noted that cyber liability was a major threat to the insurance industry as a whole. Recent cyber attacks have left the reputations of some companies in tatters. These companies, many of whom conduct a great deal of business online, have been subject to steep losses in business due to their damaged reputations. Political risk was also cited as a major concern in regards to reputational risk.
Economic issues intensify insurance woes
These two, leading risks are compounded by economic issues in Europe and the U.S. Insurance companies have had a particular tough time coping with the economic volatility in Europe, where the ongoing financial crisis has yet to show signs of abatement. Stricter regulations in the U.S. have also made it difficult for insurers to perform well considering the lingering effects of the 2008 economic disaster.
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