Cyber risk is number one concern for UK insurers - PwC

pwc_logoCyber risk tops the list of concerns for UK insurers, according to the annual ‘Banana Skins’ survey of perceived risks to the sector by the Centre for the Study of Financial Innovation (CSFI) and PwC.

The UK insurance industry shares the global concern about burgeoning regulation, particularly its cost and distraction, but also its potential to damage the international competitiveness of London as the world’s insurance capital if it is heavily “gold plated”.

By contrast, UK concern about the macroeconomic situation and the outlook for interest rates is much lower than the global average. The outlook for investment performance is also seen to be stronger by UK insurers.

Most of the risks in the Top 10 centre on the rapidly changing insurance risk landscape and the new challenges facing the industry: cyber risk, the reshaping of distribution channels with the emergence of new technology and the demand for new-style products.  The ability of the industry to handle these changes is, itself, seen as a high risk: “Change management” is the third biggest worry for UK insurers, and concern about the industry’s ability to attract talent is also higher than the global average.

Allan McGrath
Allan McGrath

Allan McGrath, financial services partner, PwC in Scotland , said: “Over the last few quarters, we’ve seen growing optimism in the Scottish and UK insurance sector, with business volumes also expanding. As people live longer and generally have more wealth to protect, it appears the long-term prospects for insurance firms are positive.

“As with other financial services sectors, the disruptive impact of new technology, changing customer expectations, alongside more exacting regulation and enduring economic uncertainty poses a challenge for insurers.

“The ability of boards to identify and manage emerging, as well as familiar,risks is at the top of the boardroom agenda and will be one of the key differentiators for success in a marketplace that offers considerable long-term opportunities, but also disruptive threats.”