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The overriding concern amongst insurers is the poor state of the global economy. Just 15 per cent of those surveyed expect any improvement in the economy during 2013, and nearly 25 per cent expect it to decline yet further, although this is a less pessimistic prognosis than was the case in 2012 when this figure was over 50 per cent.
But despite the recognition of a challenging environment, the overwhelming majority of insurance heads (90 per cent) still anticipate revenue growth. In order to realise this growth, however, the majority of existing business models will have to change, says Jonathan Howe, UK insurance leader at PwC.
According to Mr Howe, diverging trajectories of growth in different parts of the world, customers demanding more transparent and accessible products, technology that is revolutionising risk analysis and customer profiling and the overall speed of change, are all developments that are putting existing business models at risk.
One of the most complex areas for insurance companies is likely to be staff recruitment and retention. The availability of talent was identified as the biggest threat to growth by insurance CEOs, yet less than 30 per cent see filling this gap as a key investment concern.
Similarly, there is recognition among insurance leaders that they need to match the remuneration of their peers to attract talent, but also a concern that existing pay structures are not sustainable with returns decreasing in certain markets and the tax burden increasing in others.
Consequently, more than 80 per cent of insurance CEOs are planning to introduce a risk-factored approach to performance valuation and pay while more than 30 per cent have already restructured executive pay, in part to appease shareholder and public pressure.
The regain of public trust is another key challenge facing insurance chiefs. They recognise that a business culture based on limited risk at a reasonable cost will not only help to regain this trust but also meet the growing compliance burden. Yet there is also concern that over-regulation will threaten future growth.
For risk managers and insurance buyers, perhaps the greatest concern in the PwC survey is the conclusion that boardroom uncertainty over market conditions is stifling innovation and the provision of cover for emerging risks.