PwC has revealed what the insurance industry here in New Zealand considers its biggest risk.
The latest report from the global firm found that the industry in New Zealand ranks change management as its biggest irk with technology and competition rounding out the top three.
New Zealand mirrors the global opinion about change management by rating it first, but its high ranking of competition - some five places higher than the global report and eight spots ahead of a similar report conducted in Australia – is perhaps more eye-catching.
Karl Deutschle, PwC partner and insurance sector leader, said that the high ranking for competition is because of the size of the New Zealand market and, coupled with the importance of change management and technology, highlights both the challenges and opportunities facing the industry.
“In New Zealand, there is a strong emphasis on technology and change,” Deutschle told Insurance Business. “I think insurers here do see both threats and opportunities that are presented by those changes in technology, with the disruption that can cause and the potential for competitive advantage that could be created by other insurers, fintechs or whatever that could come in and steal a march if they are using those technologies.”
Deutschle added that, as a global issue for the industry, insurtech will make its presence felt on the New Zealand market. While the insurtech landscape in the country may currently be lagging other economies, the industry needs to be aware of the risk, particularly as the report found that New Zealand ranks in the bottom quartile in terms of preparedness.
“I think to kind of deal with this they have to be strategic in how they manage these risks and think more broadly around their positon in the marketplace, how those risks impact them directly and how they manage those risks,” Deutschle noted.
According to PwC, the top 10 biggest risks facing the industry in New Zealand are:
1 – Change management
2 – Technology
3 – Competition
4 – Cyber risk
5 – Reputation
6 – Regulation
7 – Human talent
8 – Investment performance
9 – Social change
10- Cost reduction
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