The 2019 PwC/Insurance Ireland survey, “Positioning for a time of change”, highlights the sentiment in an insurance industry that has become more cautious over the last three years. Some of the key findings include:
Pictured are (l-r): Ann Kelleher, President, Insurance Ireland and Chief Executive Officer, Ark Life Assurance; Dan O'Brien, Chief Economist, Institute of International and European Affairs and Darren O'Neill, Insurance Partner, PwC Advisory Practice.
While the majority (75%) are confident about their organisation’s business growth in the year ahead, a quarter are not, and this lack of confidence has grown steadily from 10% of respondents in 2017. Hiring plans have also moderated with 44% having no plans to grow the workforce in the year ahead, up from 34% in 2017.
At the same time, growth is firmly on the agenda: 60% of Ireland’s insurance leaders confirm plans to grow markets while a quarter will diversify products.
Certain economic and business challenges have become more acute since 2017 including: regulation, uncertainties from Brexit and the availability of key talent. Other concerns include the low interest rate environment, competition, change management and cyber threats.
The resilience of Ireland’s insurers is highlighted by the fact that 81% of respondents said that they are ‘reasonably well’ prepared to handle the main risks facing their businesses with a further 19% saying they are ‘very well’ prepared.
The top Government priority, according to survey respondents, should be ensuring Ireland remains competitive, including wages and rates. Addressing the cost of claims came second while improvements to infrastructure including accommodation came third.
Speaking following the survey launch, Ann Kelleher, President, Insurance Ireland and Chief Executive Officer, Ark Life Assurance, said: “Despite the challenges and moderating global economic growth, we see a resilient insurance industry in Ireland albeit having a more cautious outlook. Addressing Ireland’s competitiveness should be the top Government priority. The need for a policy focus on competitiveness and addressing the cost of claims in general insurance continue to be key priorities.”
Over a third (35%) of respondents with UK operations said that they are considering relocating to Ireland, up from 17% last year. The survey reveals that infrastructure constraints are a key concern (38%) when attracting UK companies here post-Brexit, having increased sharply since 2017 (13%).
63% said that the availability of key skills is a major threat to growth, up from 37% two years ago. This challenge manifests itself in the fact that over half (53%) confirm that they are experiencing pressure on attracting and retaining people to fill specialist roles in areas such as actuarial, compliance, data analytics, risk and underwriting.
Upskilling employees (47%) is by far the most important initiative for closing the skills gap. At the same time, over two-thirds (69%) confirmed that retaining those employees who have been upskilled is another challenge. While greater employee engagement and improved talent retention are seen as key benefits following upskilling initiatives, just 12% scored their upskilling programs overall as being ‘very effective’ resulting in higher productivity.
Paraic Joyce, Insurance Partner, PwC Ireland Assurance Practice, said: “Whatever the outcome of Brexit, it will be important that Ireland continues to develop as a centre of excellence for global insurance companies. The survey highlights some challenges around available talent, while infrastructure and accommodation still need greater focus. And it is positive to see that upskilling is viewed by Ireland’s insurance leaders as a key measure to closing the skills gap. Having available skills in a post-Brexit world will be critical.”
Data analytics and InsurTech are seen as bringing the greatest emerging technology opportunities to the insurance industry. Just 6% see Artificial Intelligence (AI) as having the greatest opportunity. This is despite the fact that AI is viewed as the greatest gamechanger for business, according to Irish CEOs surveyed in PwC’s CEO survey earlier this year.
Less than four out of ten respondents stated that digital technologies are creating ‘very high value’ for their businesses, for example, in areas such as customer sales, operational efficiencies, innovation capacity and brand value.
With cyber-attacks an almost daily occurrence, it is also worrying that nearly half (44%) of respondents admitted to not having changed their personal digital behaviour whatsoever in the last 12 months. Over half have not reviewed the permissions they give to mobile apps and a similar proportion have not revised their privacy settings on social media.
Darren O’Neill, Insurance Partner, PwC Ireland Advisory Practice, said: “According to the survey, less than a quarter (22%) of respondents are of the view that the Irish insurance industry has responded sufficiently to changing consumer purchasing habits including across digital and mobile platforms. Nearly half (41%) have no plans in terms of harnessing opportunities from humans and machines working together.
“The survey suggests that the Irish insurance industry has more work to do to leverage digital and emerging technology adoption, particularly Artificial Intelligence and robotics. Adopting new technologies takes time and resources and needs a mindset ready for change. The survey suggests a need for the industry to be more responsive to changing consumer purchasing habits as well as to more fully leverage the benefits from automation. Being at the forefront of what customers want, offering products and services that competitors cannot, will be critical.”
Over three quarters (78%) do not see self-driving cars becoming widely adopted until after 2030. Seven out of ten expect the majority of businesses in Ireland to have cyber security within 5 years.
Four out of ten (41%) survey respondents are of the view that transitioning to a low carbon economy is an opportunity. However, almost three-quarters (72%) say their organisation does not have a plan to make the transition.
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