Insurers worried about march of technology

Insurance companies are more concerned than those in any other industry about over-regulation and the pace of technological change, research has indicated.

A report into the global insurance industry by PwC, the professional services company, found that insurers were also worried about competition.

One in three business leaders said that technology would reshape the market over the next five years.

Three quarters believed that a lack of trust in their profession would put growth at risk.

Irish insurers were most concerned about rising claims costs and tight margins.

Paraic Joyce, insurance partner at PwC Ireland, said that Irish insurance companies were upbeat about the future of their industry.

“Despite the much publicised challenges in the Irish market, most notably in relation to profitability and rising claims costs, from our experience with insurance clients in Ireland, the trends highlighted in this report are very similar here,” Mr Joyce said.

“Many insurers are also optimistic about growth opportunities, despite the challenging market conditions. While business growth is the greatest priority, the sector is suffering from slim margins and regulation around the cost of claims is a key challenge.”

Mr Joyce added that Britain’s exit from the EU could present opportunities for the industry.

“While Brexit looms large and will present opportunities for the sector, it is incumbent on us all to ensure that Ireland has the capacity for new insurers to locate here and to ensure that this is properly communicated,” he said.

Irish insurers, particularly those providing motor cover, have faced criticism over rising prices.

Motor insurance premiums have increased by 70 per cent in the past two years and the cost of health insurance increased by as much as 13 per cent for some policyholders last year.

In January Eoghan Murphy, junior finance minister, published 33 recommendations arising from a government working group aimed at tackling soaring motor premiums.

It included the establishment of a national claims database and a separate fraud database to deal with suspected fraudulent claims.

The focus is on increasing transparency in the industry. At present just 30 per cent of claims are processed through the official channels of either the Personal Injuries Assessment Board or the court system. The cost to insurers of settling the remaining 70 per cent is not known.

Mr Murphy said that the group had engaged with Insurance Ireland, the industry representative body, and individual insurers to access claims data but had failed to secure all the information it sought.

The PwC report found that insurance companies globally were “acutely aware” of the impact of technological disruption on the industry.

Almost 90 per cent of chief executives surveyed by PwC believed that technology would reshape the industry over the next five years with the advent of “robo-advice”, or automated insurance services.

The report indicated that technology was reducing insurers’ costs in areas such as finance by connecting previously disjointed systems with simple software solutions.