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December 12, 2017

Global Trends 1H 2017: Upside Potential

Summary:

An uptick in global growth and rebound in employment levels, if sustained, will have favorable implications for the insurance sector.

Photo Courtesy of Pexels

Key Highlights

External influencers: mixed macroeconomic signals

  • Uptick in global growth and rebound in employment levels, if
    sustained, will have favorable implications for the sector.
  • As central banks turn cautious, bond yield improvements are likely to slow in the near term, implying limited investment yield upside for insurers.

Sector trends: hurricanes to set course

  • Supported by a strong bull run, global insurance stocks continued
    to rise as several large insurers saw improved investment and
    underwriting results.
  • Pick-up in long-term buy recommendations for U.K. and E.U. insurers reflect improved analyst expectations.
  • Natural catastrophe (NatCat) losses: Active hurricane season is
    expected to halt the relatively benign period of losses and limit
    further pricing weakness that has persisted after 2012.

See also: Insurance Technology Trends in ’17, Beyond  

Tech disruption: blockchain rising

  • Addressing the evolving nature of risk through innovation is a key
    imperative for insurers.
  • Blockchain has now progressed beyond pilot stage, with early
    adopters looking to gain significant advantages.
  • EY has taken a strong lead in helping insurers create a blockchain-based new-age information infrastructure.

Regulatory landscape: insurers prepare for impact

  • Insurers need to initiate implementation plans to
    effectively address the changes introduced by the new accounting regulations (including IFRS17 Insurance Contracts).
  • General Data Protection Regulation (May 2018): With more than
    half of the two-year post-adoption grace period now over,
    insurers will have to act fast to address the impending challenges.

You can find the full EY report here.

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About the Author

Shaun Crawford leads Ernst & Young’s $1.4 billion global insurance business. He has been in the financial services industry for 27 years, having worked both in consulting or line management with the majority of European life assurers and U.K. retail banks at some point.

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