Approximately three-fourths of insurers surveyed have lowered their target return-on-equity expectations to 10 percent or lower, a reflection of highly competitive market conditions remaining and the slow-growth economy, according to a new A.M. Best special report.

The report, “A.M. Best Spring 2016 Insurance Industry Survey,” assesses insurers’ opinions on a number of key themes, including market conditions, compliance costs, the Department of Labor’s fiduciary rule, cyber risk, reinsurance trends and exposure to Puerto Rico’s municipal bonds.

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The survey respondents identify the following as top threats facing the insurance industry:

  • Prolonged low interest rates (37.6 percent of insurers)

  • increased regulations (26.2 percent)

  • competition (19.3 percent)

  • antiquated business models (12.4 percent); and

  • the U.S. presidential race (2 percent)

In terms of competitive pressures, the health and life/annuity segments responded that they feel the most pressure from regulatory drivers, while the majority of property/casualty insurers reported facing pressure from product development, new entrants and external forces such as Amazon and Google.

On cyber risk, just over 30 percent of survey participants indicated that they had been a target of data breach or cyber-attack. Within the last five years, half of the insurers in the survey have invested more than $1 million in upgrading systems, both hardware and software. However, nearly as many insurers (42.9), spend less than $100,000 to prevent such attacks. Just 10.4 percent reported making investments of more than $1 million to prevent cyber-attacks and data breaches.

Fundamental shifts in the reinsurance industry remain apparent in the survey findings. Over the past 24 months, 43.9 percent of respondents have restructured their reinsurance program. Of these companies, 71.4 percent said they were able to get better protection for either less or the same cost. In addition, 52.7 percent of survey respondents said they had added and/or removed reinsurers from their panel in that 24-month timeframe.

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