From small-scale insurance policies on personal technological goods to vast national guarantees that protect nations from natural disasters, insurance plays a role in the lives of everyone. This has been the case since 3000 BC, when Chinese and Babylonian sailing merchants would seek out wealthy lenders to underwrite their goods in case they were lost when crossing treacherous waters. While modern-day policies are far more sophisticated, the underlying principles of the insurance sector have remained constant since its inception.
In its simplest form, an insurance policy is a guarantee against unforeseen circumstances that is designed to protect against financial loss. As the definition of ‘unforeseen circumstances’ has expanded to encompass things like cyberattacks and mass data breaches, insurers have had to adapt to meet the challenges posed by the modern world. This protective attitude must then be weighed against actions that can increase revenue and drive the industry forward – a fine balance to strike. With this in mind, World Finance has selected those firms that succeeded in maintaining this delicate equilibrium for the 2018 edition of the Global Insurance Awards.
Macro concerns
At an institutional level, the past year has principally been characterised by an increased willingness by insurers to expose themselves to risk, as evidenced by BlackRock’s Global Insurance Report 2018. By surveying 372 senior executives in the insurance and reinsurance industries across 27 countries, BlackRock learned that almost half of insurers plan to increase portfolio risk exposure over the next 12 to 24 months, compared with just nine percent in 2017.
In a strange twist, an increase in macro issues facing insurers has actually reduced the overall perception of risk, with companies now inclined to see this consistent level of risk as the new normal. Global trade tensions, geopolitical instability and the risk of currency inflation are all issues that have been rumbling on for some time; it appears their longevity has led insurers to be more sanguine about the overall environment. With this in mind, insurers have moved away from the climate of constant concern into a more risk-inclined space.
Think green
One macro concern that has featured heavily in insurers’ minds over the past year is the environment, which remains a significant concern on a national and multinational level. The largest insured loss year to date was 2017, which saw three Atlantic hurricanes classed as category four or higher, the Puebla earthquake in Mexico and wildfires that ripped through California, collectively accounting for over $135bn in losses. The total for 2018 could be set to overtake 2017 although, at the time of printing, calculations for the deadly California wildfires that took place over the course of November are yet to be finalised.
Environmental, social and corporate governance (ESG) policy has been high on the insurance industry’s priority list this year, with 83 percent of BlackRock respondents considering it imperative to have one in place. This is symptomatic of a wider corporate shift towards social responsibility as insurers recognise the significance of safeguarding the planet, as well as their public image, by being more environmentally conscious.
Companies must overcome a number of challenges before ESG policies can be implemented, including a general lack of expertise in modelling ESG variables, given their relatively recent introduction into the marketplace. Changing geopolitical factors also make it difficult for insurers to ascertain a clear picture of the return on investment for these policies.
Many insurers have called for better clarity and global consistency regarding ESG policies. In Europe, the European Commission has responded to these demands by suggesting rule changes that would explicitly require the integration of sustainability risks into investment decisions or advisory processes. The changes are currently under consideration by key EU financial supervisory bodies.
In the black
Financially, the domestic insurance industry entered 2018 on strong footing after positive premium growth in the previous year. According to the OECD’s Insurance Markets in Figures report, life and non-life premiums of domestic insurance increased in 40 out of 43 countries surveyed in 2017; these countries include all members of the OECD and the Association of Insurance Supervisors of Latin America, as well as India and Russia, among others.
Global insurance growth has remained in the black this year. Experts, however, are divided as to whether this profitability will continue. The Swiss Re Institute has predicted that global premiums will rise up to three percent annually in real terms, driven by economic momentum in Asian markets, where premiums are forecast to increase at three times the global rate. Others, including PwC, are advising insurers to exercise caution as the introduction of new regulatory frameworks has the potential to stall the market by making processes more complex and time-consuming.
Meanwhile, the global industry continues to prepare for the introduction of the International Financial Reporting Standard (IFRS) 9 and 17. IFRS 9 measures how an entity should classify and measure financial assets, and is likely to increase volatility in quotidian profits and losses sheets for most insurers. The regulation technically came into force on January 1, 2018, but many qualifying insurers have opted to take advantage of the policy’s deferral option to January 1, 2021. IFRS 17 requires insurance providers to provide high-quality financial information that is globally comparable and consistent. The directive is designed to increase transparency in the industry and is set to come into force on January 1, 2021.
On its toes
With regards to key industry players, the insurance behemoths continue to be disrupted by the rise of ‘insurtech’ firms – insurance companies employing digital technologies – challenging multinationals for a percentage of their market share. These technologies include the Internet of Things, robotic process automation, advanced consumer analytics, artificial intelligence and blockchain. Smaller start-up firms have the advantage of being highly agile in terms of their business approach. As such, they are able to adopt and implement new technologies more quickly and efficiently than larger firms. Confidence in these firms’ transformative abilities is reflected in investor interest, with the insurtech sector experiencing a 36.5 percent uplift in investment annually between 2014 and 2017.
Innovation is also an effective tool for companies to better engage with consumers. According to Capgemini’s World Insurance Report: Past, Present and Future, digital technology is a “game changer” with the “potential to redefine insurers’ ability to manage customers’ evolving preferences via seamless, real-time and direct communication”. While many companies have boosted their technological capabilities over the past 12 months, the constantly evolving nature of the industry means the most successful players are those that remain nimble and responsive to developments by becoming digitally agile.
As ever, the firms that keenly evaluate risks and make intelligent investment choices while remaining engaged with their customers are most likely to come out on top. The World Finance Global Insurance awards celebrate those industry leaders that commit to maintaining the highest standards of efficiency and transparency while forging a path for others to follow.
World Finance Global Insurance Awards 2018
Argentina
General – Caja de Seguros
Life – BNP Paribas Cardif
Australia
General – IAG
Life – BT Financial Group
Austria
General – UNIQA Group
Life – SparkassenVersicherung
Bahrain
General – Gulf Union Insurance
Life – Bahrain National Life Assurance
Bangladesh
General – Nitol Insurance
Life – Popular Life Insurance Company
Belgium
General – Baloise
Life – Baloise
Brazil
General – Allianz Brazil
Life – Brasilprev
Bulgaria
General – Armeec Insurance
Life – SiVZK (TUMICO)
Canada
General – Intact Insurance
Life – BMO Insurance
Caribbean
General – National Commercial Bank
Life – ScotiaLife Financial
Chile
General – ACE Group
Life – SURA
China
General – China Pacific Insurance
Life – Ping An Life Insurance
Colombia
General – Liberty Seguros
Life – Seguros Bolivar
Costa Rica
General – ASSA Compañía de Seguros
Life – Adisa
Cyprus
General – General Insurance of Cyprus
Life – Universal Life
Czech Republic
General – Komercní banka
Life – Allianz pojišt’ovna
Denmark
General – Skandia
Life – Danica Pension
Egypt
General – Allianz Egypt
Life – Allianz Egypt
Finland
General – OP Financial Group
Life – Nordea Life Assurance
France
General – Covéa
Life – SCOR
Georgia
General – Aldagi
Life – Aldagi
Greece
General – INTERAMERICAN
Life – NN Hellas
Hong Kong
General – China Taiping Insurance
Life – Habib Bank Zurich Hong Kong
Hungary
General – Allianz Hungária
Life – Magyar Posta Eletbiztosito
India
General – ICICI Lombard
Life – Max Life Insurance
Indonesia
General – PT Asuransi Jasa Indonesia
Life – Asuransi Jiwasraya
Israel
General – Harel Insurance
Life – Clal Insurance
Italy
General – UnipolSai
Life – Poste Vita
Jordan
General – Middle East Insurance Company
Life – Arab Orient Insurance
Kazakhstan
General – Nomad Insurance
Life – Kazkommerts-Life
Kenya
General – CIC Insurance Group
Life – Britam
Kuwait
General – Kuwait Insurance
Life – Al Ahleia Insurance
Lebanon
General – AXA Middle East
Life – Bancassurance
Luxembourg
General – AXA Luxembourg
Life – Swiss Life
Malaysia
General – Etiqa
Life – Hong Leong Assurance Berhad
Malta
General – GasanMamo Insurance
Life – HSBC Life Assurance Malta
Mexico
General – GNP
Life – Seguros Monterrey New York Life
Netherlands
General – Univé
Life – ING Netherlands
New Zealand
General – Tower Insurance
Life – Asteron Life
Nigeria
General – Zenith Insurance
Life – FBNInsurance
Norway
General – Gjensidige
Life – Nordea Liv
Oman
General – Oman United Insurance
Life – Dhofar Insurance
Pakistan
General – Adamjee Insurance
Life – EFU Life
Panama
General – ASSA Compañía de Seguros
Life – Pan-American Life Insurance
Peru
General – RIMAC Seguros
Life – MAPFRE
Philippines
General – Standard Insurance
Life – BPI-Philam Life Assurance
Poland
General – UNIQA Group
Life – MetLife
Portugal
General – Allianz Seguros
Life – Ocidental Seguros
Qatar
General – Qatar General Insurance
Life – Q Life and Medical Insurance
Romania
General – ERGO
Life – Allianz-Tiriac
Russia
General – AlfaStrakhovanie
Life – Renaissance Zhizn Insurance
Saudi Arabia
General – Al Rajhi Takaful
Life – Medgulf
Serbia
General – Generali Osiguranje
Life – Generali Osiguranje
Singapore
General – United Overseas Insurance
Life – Great Eastern Life
South Korea
General – Samsung Life
Life – Hanwha Life
Spain
General – BBVA Seguros
Life – Seguros RGA
Sri Lanka
General – Sri Lanka Insurance
Life – Ceylinco Life Insurance
Sweden
General – Trygg-Hansa
Life – Nordea Liv
Switzerland
General – Helvetia
Life – Swiss Life
Taiwan
General – Cathay Century Insurance
Life – Fubon Life Insurance
Thailand
General – The Viriyah Insurance
Life – Thai Life Insurance
Turkey
General – Zurich Sigorta
Life – Anadolu Hayat Emeklilik
UAE
General – ADNIC
Life – ADNIC
UK
General – AXA UK
Life – Legal & General
US
General – Progressive
Life – Lincoln Financial Group
Uzbekistan
General – Uzagrosugurta
Life – O’zbekinvest Hayot
Vietnam
General – PVI
Life – Bao Viet Life
