Insurance Banana Skins 2017 – Belgium

What does the Belgian insurance industry consider to be its top risks?

How is Belgium’s insurance industry prioritising the risks it faces?

Cybercrime topped the list of concerns among Belgian insurers, and was followed by a wide range of major industry risks including the persistence of low interest rates and its effect on investment performance, technological change and the management challenge it presents, as well as the ever-present risk from excessive and obstructive regulation. The overall tone of survey responses suggests an industry with major concerns about its future.

Insurance Banana Skins is conducted by PwC in collaboration with the Centre for the Study of Financial Innovation (CSFI), an independent think tank. It polls insurers to seek out their views on current and future risk trends.

In Belgium, 26 insurers took part (17 composite, 8 non-life and 1 other).

 

Read the Belgian report

To view the complete report, please visit: www.pwc.com/insurancebananaskins

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World

Round burgundy icon of Belgium

Belgium

1

Change management

1

Cyber risk

2

Cyber risk

2

Interest rates

3

Technology

3

Change management

4

Interest rates

4

Investment performance

5

Investment performance

5

Regulation

View more results


          

Customers are more and more demanding and want quick responses.

Top Belgian risks

Cyber risk

The insurance industry faces cyber risks on a number of fronts: How to create viable cyber insurance offerings to meet market demand, how to protect increasingly digital offerings and how to protect itself from breaches to guard reputation and trust.

Interest rates

The persistently low interest rate environment imposes a heavy burden on the business model of the Belgian insurance sector, and especially the life insurance branch, as it is characterised by liabilities which are generally of longer duration than assets, as well as historical commitments on which the past guaranteed yields are often very high. This is effect is reflected in the Solvency II reporting of the last years.

Also, if market rates start to increase strongly, this could also pose serious challenge for the business model of life insurers since lapse rates could go up disturbing their ALM strategy. Rethinking their ALM strategy and strategic asset allocation will allow insurers to better manage their interest rate sensitivity and obtain a better risk-return trade-off under current market conditions.

Change management

Fast-evolving markets, increasing customer demands and expectations and new distribution channels are threatening traditional insurance business models.

Managing this disruption to their sector represents a substantial risk for insurers, particularly as most are hindered by legacy systems. Moving into the digital era requires that the sector reinvent itself and adopt new ways of working with customers, while ensuring that they remain connected to their customers.

Protecting data in a digital world

As the insurance sector becomes more digital, insurers are faced with the challenge of not just identifying how they can use emerging technologies, such as artificial intelligence (AI) and mobile to create better customer experiences, but how they can build in security and data protection from the outset.

Cyber insurance: a rapidly-growing business

In risk-averse countries, cyber insurance is a fast-growing sector with some insurers already offering cover for incidences of fraud, cyberattack and/or data privacy issues. Rates for cover vary widely; comprehensive data and knowledge of cyber to assess the risks to cover and to calculate the premiums are rather limited. 

They also lack a comprehensive data with regards past occurrences and their financial impact on which to calculate premiums. 

Cyber is now a boardroom issue

Given the potential risk to a firm’s reputation, cyber risk is now a boardroom topic for insurers who cannot afford to lose the trust of their customers.

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Anxiety vs. preparation

Belgium produced a lower than average score - (based on global results) on the Banana Skins Index, implying a lower level of risk anxiety than the global average (Belgium: 3.13 vs. Global: 3.31). The country produced an above average score (Belgium: 3.12 vs. Global: 3.02) on the Preparedness Index, implying a higher level of preparedness. 

The Banana Skins Index measures the average score given by each country to the 22 risks listed in the questionnaire. The higher the score, the greater is the implied “anxiety level”.

The Preparedness Index measures the average response given to the question: “How well prepared do you think the insurance industry is to handle the risks you identified?” where 1=Poorly and 5=Well. The higher the score, the greater is the implied level of preparedness. Both indices are self-scored.

 

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Insurance Banana Skins 2017

What does the Belgian insurance industry consider to be its top risks?
 

Read the Belgian report

To view the complete report, please visit: www.pwc.com/insurancebananaskins

Contact us

Dirk Vangeneugden
Partner
Tel: +32 (0)2 710 4556
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Tom Meuleman
Partner
Tel: +32 (0)2 710 9612
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Isabelle Rasmont
Partner
Tel: +32 (0)2 710 7154
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Kurt Cappoen
Partner
Tel: +32 (0)9 268 8246
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