•          79% of Irish insurance leaders said there are more opportunities for growth in their organisations now than there were three years ago
•           International competitiveness a priority for industry to enable further development of Ireland as an international hub for insurance  

3rd October 2016: A major new survey of Irish Insurance CEOs has found industry leaders are focused on growth and innovation amidst changing market conditions, economic challenges and international competition.

The first Insurance Ireland-PwC Pulse Survey highlights the significant disruption in the industry arising from the adoption of new technology and innovative practices in addition to the influence of changes in regulation and legislation. The report forms part of the PwC Strategic Alliance Partnership with Insurance Ireland.

Speaking at the report launch, Martin Shanahan, CEO, IDA Ireland, said: “The report highlights some important trends for the Irish insurance industry.   In the light of Brexit and potential added uncertainties, IDA Ireland has a huge focus on continuing to market Ireland as an insurance centre of excellence internationally.  Given our location, highly talented people and security of access to the Single Market, we have huge opportunities to grow our insurance business in Ireland.”

Kevin Thompson, CEO, Insurance Ireland said: “These results give unparalleled insight into the key issues at play in the Irish insurance industry, which employs over 28,000 people directly and indirectly. Given the industry’s scale, it is hardwired into the local economy but must engage in and be alert to international trends from regulation to innovation. This survey shows that while there are significant challenges facing the industry, there are also opportunities and Irish insurance CEOs are availing of new technologies in order to grow their businesses and enhance their customer offerings.”

Padraic Joyce, PwC Insurance Partner, said: “This survey shows us that technology and innovation are some of the greatest opportunities for the insurance sector to drive growth and satisfy customer demands. Fully embedding digital and data analytics right across the organisation is critical.  The new generation of analytics can not only enable the business to anticipate what will happen, but also shape outcomes such as reduced accident rates or improved health and well-being as well as achieving realistic pricing models. The availability of key talent is noted as an area of concern.  In the upcoming Budget, we would welcome any measures that further incentivise foreign talent to come to Ireland.”

Report key findings:

Growth and innovation on the agenda
Despite challenging conditions, a majority (79%) of Irish insurance leaders said that there are more opportunities for growth in their organisation now than there were three years ago.  Over two-thirds (69%) confirmed that targeting business growth is the greatest focus in the year ahead, closely followed by driving innovation (66%).  Nearly half (47%) said that this growth will come from existing markets with a further one in five (18%) planning a merger or acquisition.  A similar proportion plan product diversification.

Digital is key for innovation but room for improvement
According to the survey, the majority of Irish insurance CEOs recognise the opportunities created by digital technologies but there is room for improvement.  While the majority expect digital technologies to drive innovation (61%), improve operational efficiencies (58%) and build digital trust (55%), only one in five (22%) see digital technologies making a difference where strategic decision making and retaining talent are concerned.  The survey reveals that just over a third (36%) of the senior management team are high users of data analytics.  

Many challenges
The survey reveals an insurance sector facing challenges with over-regulation being the top concern in Ireland (81%) and internationally (84%).  Other key concerns raised by participating insurance CEOs include low interest rates (63%) and uncertainties from a potential Brexit (34%).  The availability of key talent (44%) is also a concern though less so compared to global counterparts (70%). Other threats perceived to be less worrying in Ireland compared to global counterparts are the speed of technological change (Ireland:28%; Global: 69%); the shift in consumer behaviours (Ireland 25%; Global 64%); geopolitical uncertainty (Ireland: 9%; Global:64%) and cyber threats (Ireland: 16%; Global: 79%).

Costs a key focus area for international competitiveness
Nearly half (48%) of respondents said that cost containment will be an area of significant attention in the year ahead.

Half (50%) scored Ireland as more demanding as an international insurance centre when compared to other EU territories.  According to survey respondents, the UK is seen as the most competitive international regulatory regime (35%) relative to Ireland, followed by Luxembourg (23%).

Call on Government to ensure Ireland remains competitive
The top priority for Government, according to the survey, is to ensure that Ireland remains competitive (73%) in terms of wages, rates and rent.  A third scored the availability of key skills (33%).  Maintaining the competitiveness of Ireland’s corporate tax regime (27%), the strong incentivisation for personal retirement provisions (27%) and reducing the personal tax burden (24%) were cited as other areas for Government to prioritise.

Significant disruption on the horizon
More than nine out of ten (91%) respondents expect changes in industry regulation to be the main cause of high levels of disruption in the sector.  Other drivers of disruption are changes in customer behaviours (66%) and changes in core technologies (63%).

Increased regulation expected to significantly reshape the industry in the future
According to the survey, the increased regulatory and legislative constraints (83%) is the top trend that will shape the future of the Irish insurance industry over the next two to five years.  This is followed by the uncertain investment environment (62%), the increasing power of the consumer driven by social media (55%) and higher levels of cybersecurity breaches (52%). Nearly one in two (48%) said that advance technology such as predictive modelling and ‘Big Data’ will be a key driver for change; A quarter (24%) view competition from FinTech and other new disruptive players as having a significant impact.

Ends.

Note: This survey was undertaken in Q2 2016 prior to the Brexit vote.

Insurance Ireland is the Voice of Insurance in Ireland and represents 95% of the domestic insurance and 80% of the international Life Insurance market. Insurance Ireland members pay out more than €10 billion in claims to Irish customers and contribute over €1.8 billion in tax to the Irish exchequer per annum. The Insurance Industry holds €200 billion in assets in Ireland of which €35 billion is invested in Irish infrastructure and government debt, generates €32bn in premium income (domestic and overseas) and employs more than 28,000 people.

Media contact:

Johanna Dehaene

PwC

Tel: 086 810 6542

John Byrne

Communications Manager, Insurance Ireland

Tel: 01 644 7781 / 087 9383852

Insurance Ireland / PwC Pulse Survey ‘Disruption and Opportunity’

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