Insurance profitability will remain under pressure this Spring
Profitability in general insurance is likely to decrease in the coming three months while life insurers will find a slower rate of growth in profits. That’s according to a new report from PwC which highlights rising costs and lower investment yield as the main factors.
The report also notes that competition will continue to have a significant impact on profitability, especially in general insurance. It points to an “increasing threat from start-up InsurTech companies who are setting a new benchmark for communicating and analyzing customer needs.”
Jonathan Howe, UK insurance leader at PwC, commented: “As customers demand more from financial services products, the boundaries between the companies providing them are becoming increasingly blurred. As a result, insurers are trying their very hardest to become more customer-focused and are looking for different skill sets in existing and potential employees to help them succeed.”
Efficiency and greater customer experience are key factors that need to be addressed, the report says.
Jim Bichard, insurance partner at PwC commented: “Brokers continue to invest heavily in technology and process efficiency in order to ensure they remain competitive and profitable at a time when premium levels are under considerable pressure. We are also seeing significant focus in the industry on data and analytics alongside marketing with a view to developing greater insight around clients and to access new customers.”
Higher health insurance premiums prompt policy exodus
Health insurance premiums are set to increase for millions of Australians and it could mean sharp rises in costs for the country’s government and public health system. The hikes were approved by the government’s health minister but critics are warning that the decision may put a huge strain on services as up to half a million opt to scrap private insurance and use the public health system instead.
Insurers are increasing premiums by an average of 5.59 per cent according to comparison website iSelect, although some will be adding 8 per cent from April 1. A poll carried out for the site found that 71 per cent of Australians will take ‘some action’ as a result of the extra costs.
Insurance Services Office to assist with terrorism analysis
New Jersey-based firm Insurance Services Office is to collate and analyse data on terrorism for the US Treasury Department this year. The firm says that it will collect 2015 data from insurers in order to help the Treasury determine the effectiveness of the Terrorism Risk Insurance Program. There is no obligation for insurers to provide the data but the Department is urging them to do so to allow for an accurate assessment of the program.
