Deloitte’s annual report into the global insurance industry has identified the management of compliance complexities as one of a number of challenges facing the Australian life and general insurance industry.
While additional regulations such as anti-money laundering and counter-terrorism financing laws were needed to mitigate risks where possible, Deloitte’s Global Insurance Industry Outlook found these were adding to the complexities faced by insurance companies.
The report found growing globalisation was exposing more insurance companies to significant risks due to factors including natural disasters, terrorism, changing demographics and the increasing prevalence of non-insurance companies such as banks and wealth management businesses offering insurance products.
According to Deloitte’s managing partner John Meacock: “There has rarely been a more challenging time in the industry. Insurance companies across the world find themselves juggling ways to improve profitability, to grow and to compete.
He said organic growth of insurance companies was rewarded more strongly by the market than merger and acquisition-led growth, but that the relatively soft, mature market currently faced by the Australian insurance industry means this is hard to achieve.
Meacock identied momentum driven by the right product portfolio, boosting market share and merger/acquisition activity as the three core growth areas for insurance companies: “all are incredibly important”, he said.
Caroline Bennet, actuarial and life insurance partner at Deloitte, also pointed out that life insurance companies need to contend with demographic changes to their customer base, having to service baby boomers along with technically savvy younger individuals.
The report suggested better leveraging of data as one way to better meet demand, with data analytic tools able to help insurance companies predict future behaviours and events, manage claims more efficiently while reaching and retaining more customers.
