NU Online News Service, Oct. 3, 7:03 p.m. – Top insurance executives continue to be optimistic about their companies and the insurance industry as a whole, according to results of an informal survey by KPMG L.L.P., New York.
KPMG conducted the survey by using an electronic system to poll 140 top executives at a recent insurance conference it sponsored.
KPMG researchers found that 59% of the executives expected life and health insurance premiums to grow, and 88% expected property-casualty premiums to grow.
Eighty-five percent rated the insurance industry’s ability to increase profit margins over the next one to three years as strong or moderate, and 59% said their own companies would perform above or significantly ahead of expectations in the next year.
KPMG also measured executives’ attitudes about competition, by asking the executives to identify the companies that would be their major competitors over the next three to five years. KPMG asked the same question at a similar conference in 2000.
When KPMG tallied the percentage of executives naming various types of companies as major competitive threats, “international financial services companies” plummeted to 21%, from 53%, and securities brokerage firms fell to 4%, from 5%.
Banks worried 11% of the executives, up from 4%.
But the proportion of executives worried mainly about other insurers soared to 55%, from 32%.
“People are focused on traditional competition,” says Chris Swift, the partner who leads KPMG’s insurance practice. “The majority of people thought competition was coming from within the industry.”
KPMG analysts suspect that the failure of many banks and securities brokerage firms to exploit financial-services deregulation might have affected the results.
But Swift says the responses about competition could also reflect insurance executives’ new emphasis on a “back to basics” approach.
Two years ago, for example, insurance executives asked about areas important for future growth might have ranked technology first.
This year, 38% of the executives ranked underwriting first. Customer focus came in second, and distribution came in third. Technology tied for fourth with product focus.