In The Economist Intelligence Unit’s survey for CEO Briefing 2014, commissioned by Accenture, insurance executives share the confidence of their peers regarding the prospects for the global economy, their home country and their own industry.
“I’m confident we have a few good years ahead of us with regard to the economy, and that will be helpful to the insurance industry,” states Kurt Karl, chief economist at Swiss Re, one of the world's biggest reinsurers.
For some, the next 12 months will certainly bring new opportunities. Robert Benmosche, president and CEO of American International Group (AIG), a multinational insurance company, is among those who are upbeat on their firm’s prospects. “Global demand looks strong, and right now we’re seeing demand for new products and geographical expansion overlapping in many ways,” he says.
The industry’s view that emerging markets hold opportunities for growth is a big contributor to the general optimism. Insurers are more upbeat than executives in other industries, with most seeing strong or stable growth in these markets. While 43% of all respondents see a slowdown in major emerging markets in the year ahead, only 33% of insurers believe this will be the case, with 67% predicting strong or stable growth for these markets (compared with 57% overall).
For Mr. Benmosche, the opportunities vary. “Looking at emerging markets is a lot like looking at a weather map in which there are positive and negative situations,” he says. He favors Latin America, owing to its economic growth and the expansion of its middle class. While China has good prospects, he sees its ageing population as a challenge. “And the Middle East has to be capable of reinventing itself without depending on oil. In short, everything is changing, and it is necessary to know which way the tide is going.”
Among emerging markets, insurers in Asia have benefited from the fact that the region has experienced little recessionary impact. With most of its major economies continuing to grow, many insurers are attracted to this region.
In both developed and emerging markets, insurers are looking to woo new customers with new products and services. More insurance industry executives point to this strategy than those in other industries. Outside their home market, the largest proportion of insurance industry executives (61%) say that they plan to sell new products and services to new customers in emerging markets, far more than their colleagues in the banking sector (45%).
For insurers, the pressure to move forward is mounting. With new market entrants ready to take a slice of insurers’ market share—and one-quarter of insurance industry respondents cite this as a risk—the stakes are high. Therefore, the question for an industry that is by its nature cautious is: how quickly can it rise to meet these challenges?