By Rob Starr, Content Manager, Big4.com
Demographic, macroeconomic and regulatory pressures will continue to transform life insurers’ strategies, products and services in 2013, according to Ernst & Young’s new Global Insurance Center US Outlook.Ernst & Young has identified five market forces that are of key importance to U.S. life and annuity insurance companies in 2013 and these include:
Transform products to adapt to economic challenges: In the face of unrelenting interest-rate pressure, business strategy needs to change. Many life insurers have responded by de-risking and redesigning products, writing down certain lines of business and increasing reserves on a fair-value basis. A renewed focus on asset management and wealth management, rather than on costly and risky guarantees, also seems likely; and improving capital and risk management still remains a priority.
Position the business for tax, regulatory and accounting change: Insurers need to stay attentive to tax changes as the government seeks new sources of revenue. As regulatory forces challenge the industry, there is potential for increased regulation by the Federal Reserve to improve risk management and possible action by the Consumer Financial Protection Bureau to expand its scope of review from banking to insurance products. Proposed U.S. and international accounting standards will have a significant impact on life insurance business models. Organizations must review their policies, processes and controls to ensure that systems, IT capabilities, data and people are capable of implementing the new requirements.
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