New products biggest growth opportunity for (re)insurers in 2016: Guy Carpenter

New products represent the biggest growth opportunity for (re)insurers in 2016, according to a survey released on Thursday by Guy Carpenter & Company, LLC, a global risk and reinsurance specialist and wholly owned subsidiary of Marsh & McLennan Companies.

For the fourth annual survey, Guy Carpenter polled 110 insurance and reinsurance executives at the 2015 Property Casualty Insurers Association of America annual meeting, held in Hollywood, Florida from Oct. 25 to 28. Designed to identify what (re)insurance professionals believe to be the leading opportunities and threats to growth, this year’s survey examined which areas are most in need of innovation as well as the emerging risks respondents believe will impact their plans for growth in 2016, Guy Carpenter noted in a press release.

Nearly half (48%) of respondents believe new products present the most significant opportunity to expand their business in 2016, up from 40% 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% from 40% in 2014. And 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 U.S. operations for Guy Carpenter, in the release.

With concerns surrounding cyber, in particular, continuing to intensify, the industry is responding with a call for continued innovation to address this risk, Guy Carpenter said. Nearly half (49%) of survey respondents noted cybersecurity as an area most in need of innovation, followed by big data management (27%), predictive analytics (14%), and catastrophe modelling (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% of respondents indicating so. Concerns around catastrophe/non-catastrophe losses rose slightly year over year, with 24% of respondents citing this as the biggest threat to plans for growth (versus 19% in 2014). Nineteen per cent of respondents are concerned about operational inefficiencies, while 14% 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,” Gardner added. “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.”