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Interest rates, investment arena are top challenges

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Capital management challenges resulting in sustained low interest rates and a volatile investment environment will have the most significant impact on most insurers’ business in the next two years, new research shows.

Towers Watson released this finding in a new report, “2013 Insurance Megatrends Survey,” which polled 533 executives, 45 percent of whom have C-level or “chief” titles and 20 percent of whom hold actuarial titles. Individuals at life insurers comprise 33 percent of those polled.

Nearly two-thirds of the survey respondents (66 percent) flag low interest rates and a volatile investment environment as chief concerns over the next two years from a capital management perspective. Also garnering a substantial majority is “increased regulatory and legislative constraints,” including consumer protections and capital requirements (61 percent).

Half of the respondents (50 percent) also identify a “volatile investment environment, including risks of inflation/deflation, defaults and shareholder pressure.”

Fewer respondents identify the following as having the most significant impact on their businesses over the next two years:

Increased role of advanced technology, such as predictive modeling and “big data:” (26 percent);

Increasing number and severity of extreme weather events and other effects of global climate change (23 percent);

Increasing challenges of talent attraction and retention in the industry (21 percent);

Shifting demographics, including increased longevity and aging populations (19 percent);

Increasing power of the consumer as a result of social media (15 percent);

Growth in demand for insurance products in emerging markets (11 percent); and

Increased geo-political instability around the world (9 percent)


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