Business as usual no longer feasible to thrive in the 21st century as the insurance market begins its digital transformational
London, UK (June 13, 2016) – Xuber, the insurance software business of Xchanging, a CSC Company, has revealed the results of its second annual Xuber Global Reinsurance Survey, which found that soft market conditions continue to be the biggest concern for the industry.
“The 2016 Xuber Global Reinsurance Survey confirmed that the market’s appetite for change has reached tipping point,” said Chris Baker, executive director, Xuber. “The industry has spoken and there is an almost universal consensus that a fundamental technology shake-up needs to happen now. The time to innovate has arrived.
“The way insurance is being bought, sold and managed has changed, and the survey results suggest the industry must take an innovative ‘digital first’ approach in order to maintain relevance with clients. Reinsurers which create solutions grounded in technology that deliver across the insurance value chain will best serve their customers and will thrive in the digital revolution.”
The findings, outlined in Xuber’s Global Reinsurance Survey, reveal that 33 percent named soft market conditions as the biggest challenge, with 74 percent of all respondents listing it among their top five concerns – down from 81 percent who placed it among their five leading concerns in 2015. One executive said: “As the market softens still further, problems are being stored for the future and companies that do not act in a disciplined manner may well suffer later on.”
Regulation was the second most pressing concern, with 18 percent naming it their top challenge and 69 percent recognizing it among their top five concerns. Additional key findings of this year’s survey include:
- Competition from third party capital and improving investment returns in a low interest rate environment were listed as the third and fourth top challenges in the industry;
- Cyber crime and maintaining underwriting disciplines tied at 44 percent, rounding out the top five industry challenges;
- Diversifying the portfolio was seen as the number one opportunity, with 73 percent of respondents placing it in their top five, followed by mergers and acquisitions.
- Security and the need to upgrade technology were listed in the top five opportunities. The complexity of the risk and the lack of skills in-house to assess risk are the main reasons preventing reinsurance companies from being better prepared against cyber attacks;
- 2015 saw a 187 percent increase in the volume of mergers and acquisitions (M&A) in the insurance sector.(1) Cultural integration, operational alignment, system integration and resource duplication were among the main concerns related to M&A activities;
- The majority of reinsurance professionals see more competition regardless of the number of reinsurance providers; and
- None of those surveyed thought Britain voting to leave the European Union on June 23 would be positive for the London insurance market.
Read CSC’s paper, Key Shifts Mark the Path to Digital Insurance, which provides information and expert insights to help insurers navigate key technology and market shifts on their digital transformational journey.
1. Reported in the Aon Benfield Reinsurance Market Outlook, January 2016.
The Xuber survey was conducted by email and telephone interviews in April and May 2016. Reinsurance professionals from London, the United States, Switzerland, Canada and Bermuda took part in the survey. Some of the respondents asked to remain anonymous. The full list of participating companies is available in the report.
Xuber is an international software house that has been a trusted provider of innovative specialist commercial insurance software, end-to-end, for over 40 years. Xuber forms part of Xchanging, a CSC Company (NYSE: CSC). Follow us on Twitter, LinkedIn and Google+.