Interest rates, investment arena are top challenges

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);