Catastrophes? Climate change? Terrorism? Are these the biggest insurance risks?
Not according to insurance executives attending Standard & Poor’s Ratings Services insurance conference in New York, who poinnted to irresponsible competition as the single biggest risk impacting the insurance industry. Irresponsible competition occurs when insurance companies price their product too low so they can grab more market share. Of the approximately 100 executives who answered the survey, 36% cited this factor. Other risks cited included natural catastrophes (29%), regulatory risks (16%), terrorism (9%), rapidly rising interest rates (8%), and pandemics such as avian flu (2%).
These same executives said their decision-making is most influenced by shareholders (according to 47%) with competition cited by 27%. Ratings agencies (17%) and regulators (9%) were also mentioned.
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