July 15, 2015
A risk survey, by the Centre for the Study of Financial Innovation (CSFI) in association with PwC, identified the regulatory environment, cyber risk and low interest rates as top concerns for the Canadian insurance industry.
Consistent with global counterparts, cyber risk and interest rates are new to the rankings this year alongside perennial concerns around regulatory developments and the broader macro-economy, the two organizations said in release.
Regulatory risk emerged as the overall top risk for Canadian and global participants in the survey for the third successive year. While regulatory change is top of mind globally, for Canadians, the regulatory environment remains consistent with concern being driven by the impact of policy decisions and intrusion on product pricing and design.
“With their large databases and complex business ecosystems, cybercrime continues to create challenges for the industry and rocketed to second place as a concern for Canadian insurers,” the release said.
“Similarly, while insurers were able to make adjustments accounting for low interest rates, as rates remain low, a focus on further product and pricing changes is required often at the cost of product innovation.”
Chris Couture, PwC Canada’s national insurance leader said Canadian insurance companies are some of the biggest international operators.
“It is no surprise that, given the scale of their operations and rich data holdings, cyber security emerged this year as a top concern leaving many players in the sector believing that a data breach is not a matter of if but when.
“Between more regulatory scrutiny around data security and greater demand for online services in an often strained and antiquated IT environment, there is no doubt that this will remain at the forefront as a driver of change within the industry.”