The number of insurance executives who say that regulatory and legislative pressures are the most significant obstacles to growth edged up during the year past, a new report reveals.
This is among the highlights of a KPMG Insurance Industry Outlook survey, which was conducted in Spring 2013 and reflects the responses of 101 senior executives in the insurance industry. Based on revenue in the most recent fiscal year, 33 percent of respondents work for institutions with annual revenues exceeding $10 billion, 40 percent with annual revenues in the $1 billion to $10 billion range, and 27 percent with revenues in the $100 million to $1 billion range.
Six in ten insurance executives surveyed by KPMG LLP, flag regulatory and legislative issues as the top barriers to business expansion, up from 47 percent in KPMG’s 2012 survey and 41 percent from 2011. Two years ago, most survey respondents (59 percent) identified business costs as a top concern.
“In just two years, industry executives have abruptly diverted their attention from pricing concerns to regulatory matters,” said Laura Hay, national leader of KPMG LLP’s insurance practice. “This turnabout is even more significant when you consider that economic conditions have only slightly improved during this time period, so the combination of these two factors creates an exceptionally challenging market.”
Most respondents (51 percent) agree that of all the new regulations, the implementation of the Affordable Care Act (ACA) (51 percent) would have the most significant impact on the industry.
Among the report’s additional findings:
Thirty-six percent of executives say their companies are “very prepared” to proactively manage the impact of public policy and regulatory changes, up 11 percentage points from last year.
Compared to 2012, fewer executives believe their organizations are “somewhat prepared” to meet the challenges (60 percent in 2013 versus 64 percent in 2012). Only one percent of executives say their companies are “not prepared,” down seven percent from 2012.
Thirty-two percent cite regulations as the biggest drivers of revenue growth over the next one to three year period, an increase of nearly 10 percentage points from 2012 and 19 percentage points from 2011.
More than half (55 percent) of respondents believe their organization has demonstrated advanced degrees of data and analytical literacy, up from 47 percent from the previous year. Twenty-nine percent say that they satisfy the basic requirements (down three percentage points from 2012) while 15 percent indicate their company still operates with low data and analytical literacy (down four percent from 2012).
Thirty-three percent of respondents list data and analytics as their highest-priority investment area over the next two years, trailing only IT infrastructure. And 30 percent note that investing in data warehouses is a top priority.