,CSFI Centre for the Study of Financial Innovation,C S F I / New York CSFI,The Centre for the Study of Financial Innovation is a non-prot think-tank, established in 1993,to look at future developments in the international nancial eld particularly from the point of view of practitioners. Its goals include identifying new areas of business, agging areas of danger and provoking a debate about key nancial issues. The Centre has no ideological brief, beyond a belief in open markets.,Trustees Sir Brian Pearse (Chairman) David Lascelles,Governing Council Sir Malcolm Williamson (Chairman) Sir David Bell,Sir David Bell Robin Monro-Davies Sir Malcolm Williamson,Geoffrey Bell (NY) Rudi Bogni Philip Brown,Abdullah El-Kuwaiz Prof Charles Goodhart John Heimann (NY) John Hitchins,Staff,Director Andrew Hilton Co-Director Jane Fuller Senior Fellow David Lascelles Programme Coordinator Harry Atkinson,Rene Karsenti,Henry Kaufman (NY) Sir Andrew Large David Lascelles,Robin Monro-Davies John Plender David Potter Belinda Richards Mark Robson David Rule Carol Sergeant Sir Brian Williamson Peter Wilson-Smith,CSFI publications can be purchased through our website www.cs.org or by calling the Centre on +44 (0) 20 7621 1056,Published by Centre for the Study of Financial Innovation (CSFI),Email: infocs.org Web: www.cs.org,ISBN: 978-0-9926329-5-3,Printed in the United Kingdom by Heron Dawson & Sawyer,In this document/material, “PwC” refers to the network of member rms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member rms of the PwC network. Each member rm is a separate legal entity and does not act as agent of PWCIL or any other member rm. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.,CSFI / New York CSFI E-mail: infocs.org Web: www.cs.org,CSFI / New York CSFI E-mail: infocs.org Web: www.cs.org,C S F I / New York CSFI,C S F I / NewYork CSFI,NUMBER ONE HUNDRED AND NINETEEN,JULY 2015,Preface,This is the fth banana skins survey that we have carried out for the insurance industry and it is one of the most interesting.,The headline nding that (too much) regulation is perceived as the top risk for the third consecutive year is important enough. There is a widespread fear within the industry and among observers that the volume of regulation is swamping the industry; it costs too much, it takes up too much management time and it kills competition. But that is far from the only risk and it may not actually be the biggest. There is another risk cluster that encompasses macroeconomic risks (rated No. 2), interest rate risk (No. 3) and investment performance (No. 5), which suggests both that the current low interest rate environment is hurting the industry and that (difcult as things are now) they could get worse when interest rates rise.,On top of that, there is cyber risk (No. 4) a new risk for us, but one which leads the pack as far as UK and US respondents are concerned. Here, the chief concern is the vast quantity of data held in the cloud. Major breaches are inevitable, and will do both nancial and reputational damage.,On the positive side, there is a perception that the quality of management (and of risk management in particular) has improved since 2013, and that questionable business practices are less of a problem. The insurance industry itself clearly feels that it is signicantly better prepared to handle the problems it faces than it was at the time of the last survey in 2013. Against that, however, the overall level of concern about risks within the industry is at its highest level since the rst survey in 2007.,In other words, there are several themes that one can draw from the data some more encouraging than others. But no one can gainsay the coverage of the survey. It gathered a record 806 responses from practitioners (life and non- life, brokers and re-insurance) and observers in 54 countries, all of whom had to complete a detailed questionnaire that included both a checklist of perceived risks and space for open-ended responses. The mix gives the Banana Skins series its unique avour.,As usual, the CSFIs thanks go to the two authors my colleague, David Lascelles (now the Centres senior fellow), and Keyur Patel (who recently published a CSFI survey on the Citys professional bodies). I would also very much like to thank the team at PwC with whom we worked. This is a CSFI report (and we take responsibility for it), but it is only possible because of the generous support that we get from PwC. Long may that continue.,Andrew Hilton Director CSFI,This report was written by David Lascelles and Keyur Patel,CSFI / New York CSFI E-mail: infocs.org Web: www.cs.org,1,C S F I / New York CSFI,Sponsors foreword,Welcome to Insurance Banana Skins 2015, a unique survey of the risks facing the industry, which has been produced