Cyber and Climate Change Identified as Top Emerging Risks for Year Ahead
New York, NY (Nov. 5, 2015) – New products represent the biggest growth opportunity for (re)insurers in the year ahead, according to a survey released today by Guy Carpenter & Company, LLC, a leading global risk and reinsurance specialist and wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC). The fourth annual survey polled insurance and reinsurance executives at the 2015 Property Casualty Insurers Association of America (PCIAA) Annual Meeting, held in Hollywood, Florida. Designed to identify what (re)insurance professionals believe to be the leading opportunities and threats to growth, this year’s survey examines which areas are most in need of innovation as well as the emerging risks respondents believe will impact their plans for growth in 2016.
Nearly half (48%) of respondents believe new products present the most significant opportunity to expand their business in 2016, up from 40 percent in 2014. This is followed by new geographic markets (24%), mergers and acquisitions (14%), talent acquisition (9%) and new distribution channels (5%). Cyber once again claimed the top spot as the most threatening emerging risk, jumping to 65 percent from 40 percent in 2014. Meanwhile, one-in-four professionals ranked climate change as the most threatening emerging risk, followed by terrorism (10%).
“This year’s survey reinforces that there is a significant opportunity to evolve the way in which insurers use technology to assess risk, identify new growth opportunities, enhance the customer experience, and transform massive amounts of data into actionable business strategy,” said Tim Gardner, CEO of US Operations for Guy Carpenter. “At Guy Carpenter, innovation and advancements in technology are among our top priorities. We continue to invest in our industryleading analytics and new product development in order to arm our clients with market-leading solutions and intelligence to navigate a new global risk landscape.”
With concerns surrounding cyber, in particular, continuing to intensify, the industry is responding with a call for continued innovation to address this risk. Nearly half (49%) of survey respondents noted cyber security as an area most in need of innovation, followed by big data management (27%), predictive analytics (14%), and catastrophe modeling (10%).
Looking at potential challenges facing the industry in the year ahead, undisciplined / unprofitable underwriting once again ranked as the leading threat to plans for growth, with 33 percent of respondents indicating so. Concerns around catastrophe / non-catastrophe losses rose slightly year over year, with 24 percent of respondents citing this as the biggest threat to plans for growth (vs. 19% in 2014). Nineteen percent of respondents are concerned about operational inefficiencies, while 14 percent are most worried about global economic uncertainty, followed by regulatory and rating agency changes (10%).
“Cyber risk, climate change and terrorism continue to pose a serious threat not only to the insurance industry, but also to governments, businesses and communities around the world,” said Mr. Gardner “We as an industry have the opportunity to address these emerging risks head-on, with innovative solutions and new product development that can transform these potential challenges into growth opportunities. At Guy Carpenter, we continue to invest in the future by helping our clients see ahead of the curve in order to gain a sustained competitive advantage.”
About Guy Carpenter
Guy Carpenter & Company, LLC is a global leader in providing risk and reinsurance intermediary services. With over 50 offices worldwide, Guy Carpenter creates and executes reinsurance solutions and delivers capital market solutions* for clients across the globe. The firm’s full breadth of services includes line-of-business expertise in agriculture; aviation; casualty clash; construction and engineering; cyber solutions; excess and umbrella; excess and surplus lines; healthcare & life; marine and energy; mutual insurance companies; political risk and trade credit; professional liability; property; retrocessional reinsurance; surety; terrorism and workers compensation. GC Fac® is Guy Carpenter’s dedicated global facultative reinsurance unit that provides placement strategies, timely market access and centralized management of facultative reinsurance solutions. In addition, GC Analytics®** utilizes industry-leading quantitative skills and modelling tools that optimize the reinsurance decision-making process and help make the firm’s clients more successful. For more information, visit www.guycarp.com.
Guy Carpenter is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With annual revenue exceeding $13 billion, Marsh & McLennan Companies’ 57,000 colleagues worldwide provide analysis, advice, and transactional capabilities to clients in more than 130 countries. through: Marsh, a leader in insurance broking and risk management; Mercer, a leader in talent, health, retirement, and investment consulting; and Oliver Wyman, a leader in management consulting. Marsh & McLennan is committed to being a responsible corporate citizen and making a positive impact in the communities in which it operates.
Visit www.mmc.com for more information.
*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities Corp., a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, main office 25 The North Colonnade, Canary Wharf, London E14 5HS. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities Corp., MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.
**GC Analytics is a registered mark with the U.S. Patent and Trademark Office.