“Everyone is looking for growth…that doesn’t make it easy to come by.”
Matt Keeping, Willis Towers Watson North America head of broking, opened his report with this statement as he painted an optimistic picture of the growth prospects of the insurance industry in the coming year.
Willis Towers Watson recently released its
Market Realities 2017 report to forecast the growth trajectories of various commercial insurance lines in the coming year.
Citing “benign” natural catastrophes, and a stable source of capital, he said that the soft rates and low interest rates are “manageable” despite falling short of market expectations.
With natural catastrophe losses on the rise and claims increasing, Keeping said insurance has ample reserves to cover the cost.
But the question remains, where will growth come from?
“Some carriers are growing, some by buying other related businesses. Some are shrinking, by shedding lines. But mostly large insurers are attacking the slow-growth quagmire through structural and strategic methods of expense management. Many see growth by merger as the inevitable strategic solution that insurers will pursue. For now, we’re not seeing it,” Keeping observed.
He further explained, “So what are we seeing? We could call it a rather uninspiring period of flat growth and uncertainty. I prefer to call it a sign of stability. I’d also point out that in a heavily regulated industry like ours this is not a bad thing. This is a good thing. This stability, in fact, reflects the main social and economic purpose of our industry: that when disaster strikes, we can be relied upon.”
Still, Keeping said, there are opportunities emerging as the byproduct of innovation in insurance.
“Another avenue for growth is narrowing the gap between economic and insured losses by widening the availability of risk transfer. For example, new technologies hold out the promise of automating some of the process in distributing micro-insurance and spot insurance products,” he emphasized.
“To some, these kinds of developments stand in blatant contrast to the underwriting partnership that remains the basis of our industry. I would argue that we need to embrace such developments, to position ourselves to guide them and, ultimately, to own them. Rather than a threat, they may be a golden opportunity,” Keeping concluded.
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