A.M. Best Special Report: Latest A.M. Best Survey Reveals Cyber Risk and Economy Remain Top Concerns in Insurance Industry
CONTACTS:
Bernhard Gueldner Senior Industry Research Analyst – Industry Research +1 908 439 2200, ext. 5465 bernhard.gueldner@ambest.com
Michelle Baurkot Assistant Vice President – Industry Research +1 908 439 2200, ext. 5314 michelle.baurkot@ambest.com
Christopher Sharkey Manager, Public Relations +1 908 439-2200, ext. 5159 christopher.sharkey@ambest.com
Jim Peavy Assistant Vice President, Public Relations +1 908 439-2200, ext. 5644 james.peavy@ambest.com
FOR IMMEDIATE RELEASE
OLDWICK - MARCH 29, 2016 02:18 PM (EDT) A.M. Best’s latest quarterly survey results show that insurers remain pessimistic on economic improvement in 2016, and that cyber risk has become a prominent industry issue. The Best Special Report, titled, “A.M. Best Winter 2015/2016 Insurance Industry Survey,” also reveals the insurance industry’s views on topics that include Federal Reserve interest rate hikes, the 2016 presidential election, Own Risk and Solvency Assessment, mergers & acquisitions (M&A) and predictive analytics.
For the survey, A.M. Best received several hundred responses, representing U.S. insurance companies in the property/casualty (P/C) (70.4%), life/annuity (L/A) (22.2%) and health (5.3%) segments. The remaining 2.1% identified themselves as surety, reinsurance, credit and term or title insurance companies.
Survey highlights include the following:
Nearly half of the P/C sector (48.0%) anticipates a return on equity of 7% or less, compared with 33.3% of L/A companies. Overall, half of total respondents expect returns between 8% and 13%;
The survey asked insurers to vote on the most-used word or phrase they encountered in 2015. “Cyber risk” was the most popular answer, capturing 31% of all responses. Low interest rate environment came in second at 29.9%;
Just 5.4% of respondents felt that economic conditions would improve in 2016. Almost 46% of respondents indicated conditions would remain stable, while 30.4% believed that conditions would deteriorate;
Less than half of the responding insurers reported using predictive analytics (48.9%). Those companies that reported using predictive analytics cited underwriting (82.2%), claims (39.7%) and strategy (24.7%) as their major areas of focus;
Just under 30% of respondents believe that the main driver of industry M&A activity in 2016 will be for strategic use of excess capital;
More than half of the respondents see economic events (22.6%), capital markets (14.5%) and political events (13.4%) as leading disruptors for the next five years ; and
Donald Trump is the most-favored presidential candidate in the 2016 election, according to 26.5% of P/C respondents and 26.7% of life/health respondents.