Insurance industry executives worried about interest rates and regulation

Third of 50 insurance leaders surveyed by PwC and Insurance Ireland fear effect of new rules

PwC offices in Dublin Docklands:  81 per cent of those it surveyed believed red tape is the greatest threat to growth. Photograph: Nick Bradshaw
PwC offices in Dublin Docklands: 81 per cent of those it surveyed believed red tape is the greatest threat to growth. Photograph: Nick Bradshaw

Senior executives in the Irish insurance industry perceive a threat from regulation and worry about low investment income due to lower interest rates, a survey has found.

The study, by PricewaterhouseCoopers (PwC) and Insurance Ireland, canvassed the views of “almost 50 insurance industry leaders” and found that red tape is the greatest perceived threat to growth, with 81 per cent believing it is a problem.

About 18 per cent of those surveyed said they were eyeing mergers or acquisitions to boost growth, while 47 per cent plan to grow by grabbing more share of existing markets. Only 6 per cent of Irish insurers plan to enter new markets.

Nearly a third of respondents are concerned about implementing new solvency rules and the effect this would have on their business. About 44 per cent, meanwhile, see the limited availability of required skills as a threat to growth.

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Cyber threats

Irish insurance industry leaders are less concerned about cyber threats than their international peers, but more than 60 per cent highlighted the cut-price interest rate environment, and the damage this does to investment returns, as a threat to their business.

Despite the threats, almost 80 per cent of Irish respondents said there are more opportunities for growth now than three years ago. Meanwhile, more than a quarter see inadequate regulation of foreign insurers entering the Irish market as a problem.

Respondents generally agreed technology was driving innovation in the industry.

About half of respondents say Ireland is a more demanding insurance market than other countries. The UK is considered Ireland’s biggest competitor, followed by Luxembourg.

A priority for the Government and policymakers should be to keep costs within the economy sustainable, the report found.

"In the upcoming budget, we would welcome any measures that further incentivise foreign talent to come to Ireland," said Padraic Joyce, PWC insurance partner.

Mark Paul

Mark Paul

Mark Paul is London Correspondent for The Irish Times