JOHANNESBURG - Technology and cyber crime are among the biggest concerns for insurers across the globe, professional services company PwC said on Wednesday, citing an annual survey which included 28 responses from South African firms.
The report by independent think tank Centre for the Study of Financial Innovation in association with PwC polled over 900 insurance practitioners and industry observers in 53 countries, to find out where they saw the greatest risks over the next two to three years.
South African respondents said weak economic growth, low disposable income and persistent high unemployment levels were significant contributing factors, said Victor Muguto, long-term insurance leader for PwC Africa.
"Given our very difficult economic environment, it is not surprising that macroeconomic risk was ranked the number one concern in South Africa, compared to a global ranking of 9th," Muguto said.
Socio-economic and political uncertainty had also slowed down the pace of economic and insurance sector growth across the rest of Africa, he added.
But despite the uncertainty, Africa’s insurance markets remained some of the least penetrated in the world and the opportunities for growth were immense.
"The need for insurers to be more agile and innovative in an environment where insurers and their customers are rapidly becoming more technologically empowered has never been more critical," Muguto said.
South African insuers cited threats posed by cyber crime as their second biggest concern, consistent with the global rankings.
This was a rising risk for those brokers, insurers and re-insurers involved in under-writing, and was also becoming a huge risk across the entire insurance value chain, given that the various industry players were custodians of customer information and data, the CSFI/PwC report showed.
Difficult investment markets feature heavily in the outlook for the insurance industry, more so among South African insurers who ranked this risk third, compared to the global ranking of fifth.
While technology was only rated fourth by local insurers compared with the the global ranking of first, it had risen significantly relative to the previous ranking at 11th in 2017.
The unrelenting heavy agenda of regulatory change continued to keep regulatory risk at the top end of the rankings, with South African respondents placing this fifth, compared to the global ranking of fourth.
"Survey respondents expressed frustration with the cost and distraction of compliance and warned of the potentially damaging effects that disproportionate requirements could have in areas such as capital, consumer protection and product availability," PwC said.
- African News Agency (ANA)