Novae Group plc (“Novae”) has announced the launch of its first industry survey, which provides direct insight from the market on the market about what the future of the insurance industry holds.
The report is based on original research done within the London insurance industry, drawing on the insights and first-hand experience of many of the leading figures from the insurance market. A central tenet of the research was that “the future may not be easy to predict, but it is not impossible to prepare for”. The resulting publication is the cumulative wisdom of some of the industry’s greatest minds on everything from the context of the global economy to innovation, regulation and scale. Some of the key themes to emerge from the research are as follows:
1. “Bigger, Faster, Scarier”: the future of the industry is ‘big’ and competitive...not only the companies within it, but the nature of the risks they will be asked to insure.
According to one market participant: “There will be more consolidation; the three large brokers will consolidate down into two. There will be significantly more consolidation in the US and globally amongst small brokers because of the cost of capital and cost of regulation. Insurance companies don’t welcome this loss of competition. But it is a given.”
2. “New products, new markets”: in terms of both geography and product, areas of growth in the future will be different from those in the past - and profitability will be hard won
According to one market participant: “People need to be more innovative and write more business and create relationships in emerging markets and use their brains. It’s a challenge but it’s a challenge for all of us that we have to work out. If you are struggling to write one line of business only, you will either get taken over, or no-one will want to do business with you.”
3. “Regulation”: regulation was made for Man, not Man for regulation. The insurance industry had a ‘good crisis’, and it should be more assertive in telling the regulators what works
According to one market participant: “Increased regulation is the biggest factor - it is more and more intrusive and completely bloody relentless. It particularly impacts on new companies.”
Commenting on the survey launch, Matthew Fosh, Chief Executive Officer of Novae Group plc said:
“In an industry built on having eyes on future risk, how often do we look into our own future? This was one of the reasons for carrying out the research, and one of the first questions we asked the market. With this research, we also felt it was right to tease out recognition of the importance of the industry, which is often seen in the media in a negative way. The truth is that the insurance industry, as a major contributor to the economy, is central to the financial services sector, not only in the UK, but worldwide. Hopefully this survey reinforces that reality.”
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