PwC:: insurance companies must adapt to changing market dynamics – Insurance Age


PwC insuranceI could not agree more with these words of wisdom from David Law. This isn’t the first time that PwC have tried to warn the industry about the need to “evolve” for survival in a rapidly changing risk environment.

Contrary to what some would have you believe, the lack of innovation – of the “creative destruction” variety – as evidenced in self-similar operations, culture, products, etc. IS all the confirmation that one should need to establish that “risk businesses” are still intent upon looking at the past for answers about the future instead of scanning their own risk horizon and creating resilient strategies for uncertainty!

risk horizonDavid Law, global insurance leader at PwC, said: “The immediate pressures of market volatility and regulatory upheaval have left little space in boardroom agendas for insurers to think about how to remain competitive in the years ahead. It is vital insurers do not get blinded by the current challenges and set a clear vision for the future.

“Growth opportunities exist, particularly in faster growing economies and from new technology developments, and those insurers that are able to respond to this changing risk landscape with innovative solutions will be rewarded by the way they are valued by customers and investors.”

He added: “Insurers who are too slow to respond to the changing market dynamics could find themselves on the back foot competitively and struggling to secure sufficient capital.

via Pwc: companies must adapt to changing market dynamics Insurance Age.

PwC on risk resilience:: you don’t want swans in your blindspot…or anywhere else!


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In this report PwC follow on from criticisms of the “reach” of conventional risk management contained in the, AIRMIC sponsored, “Roads to Ruin” report that I have previously commented on. Whilst we should ALL be grateful that the subject matter is being kept on the agenda, it is disappointing how few “risk professionals”, insurers, brokers and business leaders are aware of the shortcomings of what is deemed to be accepted “best practice”.

It isn’t only me who has focussed upon the potential implications for business and, to a greater extent, the UK (if not global) insurance industry. Mactavish Consulting have been ringing the alarm bells for, at least, 2 years.

Here is what their own summary had to say:

Black swans turn grey is a thought provoking paper looking at how the landscape of risk is changing from a past environment where boards believed their organisations could manage and control risks to the present where established risk approaches and thinking are being repeatedly outpaced.

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Do Zombies sleep?:: bankers are ‘kept awake’ by fears of new crisis | Herald Scotland


This shouldn’t come as a great surprise…no, not the fact that bankers have a conscience (the article doesn’t go that far and I doubt the research would have obtained a believable response)!!!

We are ALL worried about the impact of a  “global recession” but banking has been in a cultural crisis for years. Financial and political “mismanagement” led to a financial crisis that, without decisive action, has created a Social crisis.

Now, finding a solution IS something that is worth losing sleep over! But, on the evidence of the last few years the answers will not come from the people who brought us here…at our expense.

Another global recession triggering a catastrophic banking crisis is keeping bankers awake at night, according to a survey of the world’s banking industry from the Centre for the Study of Financial Innovation (CSFI).

The main cause of anxiety is the eurozone crisis, with the shock of a euro collapse liable to hit banks not just in Europe but in all major regions of the world, says CSFI’s annual Banking Banana Skins survey, produced in association with PwC.

via Bankers are ‘kept awake’ by fears of new crisis | Herald Scotland.

WEF 2012: talking the talk…all the way to Dystopia


WEF top Five Global RisksOn paper a great annual event. Something that SHOULD have real “punch”…but what happens to all the “thought leadership” when the collective wisdom spills out into the real world? Simple: not a lot!

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Broker Profitability: Tony Cornell’s take on the industry :: Insurance Age


So, Tony Cornell’s macro perspective mirrors my own conclusions and contradicts the sentiments expressed in the recent PwC survey…no surprise there then! I have already declared my own opinion that a “mood of optimism” was, at best, dangerously naive.

The coming year will be a difficult one for growth. Inflation is likely to return to low levels, economic growth will be non-existent and competition will remain fierce. Margins will be under attack and cutting expenses to match a potential fall in income will be a survival strategy for most. This means, yet again, lower standards of service from insurers, hardening claims attitudes, re-organisations and staff reductions. Consolidators will need to concentrate on integration and achieving economies of scale other than through commission leverage. It will be a difficult year…

via A year to remember Insurance Age.

Tony knows the UK insurance industry better than most and has been sharing his thoughts for more years than he would (probably) admit. What Tony does not know is that unmanaged and excessive complexity is at the root of many of these issues. YET, AN INDUSTRY THAT PROFESSES TO KNOW ABOUT RISK EXPOSURE, IS “CONTENT” TO CARRY ON AS THEY HAVE DONE, DESPITE; A RADICALLY CHANGED ECONOMIC ENVIRONMENT AND; WITHOUT REALLY CONSIDERING THE EXTENT OF THE CONTRIBUTION TO THEIR OWN PLIGHT; ATTEMPTING TO TACKLE TODAY’S PROBLEMS WITH YESTERDAY’S TOOLS, OR; RECOGNISING THAT TREATING UNCERTAINTY AS IF IT WERE RISK, IN THE “DIGITAL AGE”, IS AN UNFORGIVEABLE ERROR.