Approximately 75% of insurers anticipate changing the way they manage risk and nearly 40% plan to modify their capital structure over the next 12 months, new research reveals.
PricewaterhouseCoopers International Limited, London, U.K., published this finding in a 2012 annual report, “Top Issues.” The study explores risk and capital management, financial reporting, strategy and execution, regulatory compliance, as well as tax compliance issues and trends.
Because of the low interest rate environment, the report says, insurers are earning less investment income than in prior years. To maintain profit margins, companies are likely to “more aggressively seek ways to reduce expenses.”
Low interest rates are also prompting insurers to “re-examine policyholder experience” and to “address fundamental strategic issues.” Assuming the low interests continue indefinitely, the companies may have to redesign their product portfolios “to reflect new economic realities.”