Insurance Banana Skins The CSFI survey of the risks facing insurers CSFI. Centre for the Study of Financial Innovation

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1 Insurance Banana Skins 2015 The CSFI survey of the risks facing insurers CSFI Centre for the Study of Financial Innovation

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3 The Centre for the Study of Financial Innovation is a non-profit think-tank, established in 1993 to look at future developments in the international financial field particularly from the point of view of practitioners. Its goals include identifying new areas of business, flagging areas of danger and provoking a debate about key financial issues. The Centre has no ideological brief, beyond a belief in open markets. Trustees Sir Brian Pearse (Chairman) David Lascelles Sir David Bell Robin Monro-Davies Sir Malcolm Williamson Staff Director Andrew Hilton Co-Director Jane Fuller Senior Fellow David Lascelles Programme Coordinator Harry Atkinson Governing Council Sir Malcolm Williamson (Chairman) Sir David Bell Geoffrey Bell (NY) Rudi Bogni Philip Brown Abdullah El-Kuwaiz Prof Charles Goodhart John Heimann (NY) John Hitchins 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 or by calling the Centre on +44 (0) Published by Centre for the Study of Financial Innovation (CSFI) info@csfi.org Web: ISBN: Printed in the United Kingdom by Heron Dawson & Sawyer In this document/material, PwC refers to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL), or, as the context requires, individual member firms of the PwC network. Each member firm is a separate legal entity and does not act as agent of PWCIL or any other member firm. 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 info@csfi.org Web:

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5 C S F I / New York CSFI NUMBER ONE HUNDRED AND NINETEEN JULY 2015 Preface This is the fifth banana skins survey that we have carried out for the insurance industry and it is one of the most interesting. The headline finding 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 (difficult 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 financial 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 significantly better prepared to handle the problems it faces than it was at the time of the last survey in Against that, however, the overall level of concern about risks within the industry is at its highest level since the first survey in 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 nonlife, 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 flavour. As usual, the CSFI s thanks go to the two authors my colleague, David Lascelles (now the Centre s senior fellow), and Keyur Patel (who recently published a CSFI survey on the City s 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 info@csfi.org Web: 1

6 Sponsor s foreword Welcome to Insurance Banana Skins 2015, a unique survey of the risks facing the industry, which has been produced by the CSFI in association with PwC. We re delighted to be continuing our support for this initiative, which began with the publication of the first edition in The Banana Skins reports provide valuable insights into the risk concerns at the top of the boardroom agenda and how these perceptions change over time. Many of you will be comparing the industry-wide findings against your own assessment of the current and emerging risk environment. Cyber risk is the number one banana skin for participants from non-life businesses, as well as being high up the list for reinsurers and life insurers. As more and more business moves to online and mobile channels, insurers vulnerabilities to hacking, fraud and data compromise continue to mount. The risk is heightened by the volume of medical, financial and other sensitive policyholder information held by insurers, which if compromised would lead to a loss of trust that would be extremely difficult to restore. It s vital that boards take the lead in evaluating and tackling cyber risk within their data and systems infrastructure, rather than seeing this as solely a matter for IT. As the threats increase, we re likely to see more specialists in surveillance, encryption and biometric verification coming into the industry. At the same time, it s important to look at how cyber security can be strengthened without undermining the digitally-enabled ease and accessibility customers now expect. The leading banana skins for life insurers are interest rates and the macro-economy. These are also top ten risks for reinsurers and non-life insurers. Low interest rates are making it difficult to generate competitive returns for policyholders. Potentially higher capital charges for guaranteed products could drive up costs still further and erode returns in many markets. Tight cost control is clearly crucial in being able to sustain margins in low growth markets. We re also seeing moves towards more dynamic investment strategies as insurers look to boost asset returns, while remaining within reasonable risk tolerances. At the heart of this approach is a better understanding of the interdependencies between capital demands and asset yields, enabling insurers to capitalise on market opportunities while curbing capital costs. Regulation is once again a prominent Banana Skin across all segments of the industry. The latest wave of regulatory change is not only creating huge operational disruption, but also calling into question longstanding strategic certainties. Costs, prices and returns could soon become unsustainable if the changes aren t managed effectively. This in turn requires a mechanism capable of looking beyond basic operational compliance at how new regulation will affect the strategy and structure of the organisation and using this assessment to develop a clear and coherent company-wide response. Regulation is just one of the disruptive shifts facing insurers as they grapple with a perfect storm that includes the impact of digital technology, changing customer expectations and competition from new entrants. The transformational challenges this presents are reflected in the fact that change management is a top five Banana Skin for life, non-life and broking businesses, though notably not reinsurers. More than just new systems and processes, successful execution demands a clear sense of how culture, organisation and talent strategies will need to change and how this can be achieved. Many of these disruptive shifts echo the social, technological, environmental, economic and political (STEEP) mega-trends PwC has identified in its Insurance 2020 reports ( Insurers are using Insurance 2020 to help them judge the implications of these trends for their organisations and determine the strategies needed to respond. We would like to thank all the participants in the survey for sharing their valuable insights and thank the CSFI for the richness of insight and perceptive comment in this report. The long-term prospects for insurers are positive as people around the world live longer and have more wealth to protect. The ability to identify and manage emerging as well as familiar risks will be one of the key differentiators for success. We hope that you find Insurance Banana Skins 2015 useful and thought-provoking. If you have any feedback or would like to discuss any of the issues raised in more detail, please do not hesitate to contact us. Stephen O Hearn Mark Train Global Insurance Leader, PwC Global Insurance Risk Leader, PwC Tel: Tel: +44 (0) stephen.ohearn@ch.pwc.com mark.train@uk.pwc.com LinkedIn: ch.linkedin.com/in/stephenohearn1 2 CSFI / New York CSFI info@csfi.org Web:

7 About this survey Insurance Banana Skins 2015 surveys the risks facing the insurance industry in mid- 2015, and identifies those that appear most urgent to insurance practitioners and close observers of the insurance scene around the world. The report, which updates previous surveys in 2007, 2009, 2011 and 2013, was conducted in March and April 2015, and is based on 806 responses from 54 countries. The questionnaire (reproduced in the Appendix) was in three parts. In the first, respondents were asked to describe, in their own words, their main concerns about the insurance sector over the next 2-3 years. In the second, they were asked to rate a list of potential Banana Skins or risks. In the third, they were asked to rate the preparedness of insurance institutions to handle the risks they saw. This report ranks and analyses each Banana Skin individually. Replies were confidential, but respondents could choose to be identified. The breakdown of responses by type of respondent was Observers 28% Broking/ intermediary 5% Life 27% Reinsurance 6% Non-life 34% Nearly two thirds of the respondents were from the primary insurance industry. The remainder were from the reinsurance and broking sectors, and non-practitioners such as regulators, consultants, analysts and other professional service providers. CSFI / New York CSFI info@csfi.org Web: 3

8 The breakdown of responses by region was Middle East/ Asia 2% North America 10% Africa 5% Latin America 12% Europe 51% Far East/ Pacific 20% The geographic spread overweighs Europe and underweighs other regions. This is because of a significant response from the international insurance business in London. The breakdown of responses by country was Argentina 11 Greece 12 Poland 2 Australia 28 Hong Kong 9 Portugal 25 Austria 2 Hungary 5 Russia 1 Belgium 25 India 12 Singapore 22 Bermuda 18 Ireland 16 Slovakia 6 Brazil 43 Italy 12 South Africa 35 Canada 37 Japan 8 South Korea 31 Cayman Is. 1 Latvia 6 Spain 29 China 5 Luxembourg 19 Switzerland 20 Colombia 1 Malaysia 8 Taiwan 4 Croatia 4 Malta 1 Thailand 2 Cyprus 10 Mexico 12 Turkey 46 Czech Rep. 10 Netherlands 42 UAE 1 Denmark 18 New Zealand 43 UK 74 Ecuador 1 Nigeria 2 Uruguay 7 Egypt 1 Norway 1 USA 29 Finland 19 Panama 3 Vietnam 3 France 4 Peru 16 Zimbabwe 4 4 CSFI / New York CSFI info@csfi.org Web:

9 The The tone tone of the of the response is more is more negative negative this this year year External External pressures are are mounting Summary This survey This survey identifies identifies the risks, the risks, or "Banana or "Banana Skins", Skins", facing facing the global the global insurance insurance industry industry the in first the half first of half 2015, of 2015, as seen as by seen a sample by a sample of 806 of practitioners 806 practitioners and close and close observers observers from 54 from countries. 54 countries. It comes It comes at a time at a when time the when world the world economy economy is showing is showing moderate, moderate, if uneven, if uneven, signs signs of growth, of growth, but the but industry the industry itself itself faces faces a difficult a difficult investment investment climate, climate, a heavy a heavy regulatory regulatory agenda, agenda, and the and pressures the pressures of deep of structural deep structural and technological and technological change. change. Significantly, Significantly, the overall the overall tone of tone the of the responses responses this year this is year more is more negative negative 5 than the than previous the previous survey survey in 2013, in 2013, as as measured measured by our by Insurance our Insurance Banana Banana 4 Skins Skins Index Index (the anxiety (the anxiety index ), index ), 3 despite despite the resumption the resumption of global of global growth. growth. The average The average score given score given by respondents by respondents 2 to our to list our of list 25 risks of 25 rose risks to rose its highest to its highest level since level we since began we began the series the series in 2007, in 2007, 1 reversing reversing the downward the downward trend we trend saw we in saw in in the in aftermath the aftermath of the of global the global financial financial crisis. crisis. Insurance Insurance Banana Banana Skins Index Skins Index Avg score Avg score Top score Top score This This pessimism pessimism is due is primarily due primarily to to The top The scores top were: scores 2007: were: Regulation 2007: Regulation 2009: Investment 2009: Investment pressures pressures from the from economic the economic and public and public performance performance environments environments (i.e. (i.e. macro-economy, 2011: Regulation 2011: Regulation regulation, regulation, political), political), signalling signalling that the that the 2013: Regulation 2013: Regulation sector sector considers considers its greatest its greatest risks to risks lie to lie 2015: Regulation 2015: Regulation outside outside its direct its direct control. control. Chief Chief among among the external the external risks risks regulation, is regulation, which which tops the tops survey the survey for the for third the third year running. year running. Concern Concern is driven is driven by the by quantity the quantity of regulatory of regulatory reform reform at all levels, at all levels, in in particular particular the EU s the EU s Solvency Solvency 2 Directive. 2 Directive. The fear The is fear that is these that these initiatives initiatives are are loading loading the industry the industry with costs, with costs, and distracting and distracting management management from from the task the of task of running running profitable profitable businesses, businesses, as well as as well heightening as heightening compliance compliance risk. risk. Worries Worries about about regulatory regulatory pressure pressure are sharpened are sharpened by the by difficult the difficult economic economic environment environment in which in which the industry the industry currently currently finds itself, finds itself, in particular in particular the persistence the persistence of low of interest low interest rates (No. rates 3) (No. which 3) which is depressing is depressing investment investment performance performance (No. 5) (No. 5) and affecting and affecting bottom bottom line results. line results. Savings Savings products products with guaranteed with guaranteed returns returns (No. (No. 7) remain 7) remain a concern a concern for the for life the side life of side the of business. the business. Respondents Respondents generally generally also see also see low yields low yields driving driving a strong a strong increase increase competition in competition as insurers as insurers seek to seek boost to boost their their "top line" "top revenues, line" revenues, and outsiders and outsiders such as such hedge as hedge funds funds chase chase business business with new with new capital. capital. The availability The availability of capital of capital at No. at 22 No. is clearly 22 is clearly not seen not to seen be a to problem: be a problem: rather rather opposite, the opposite, is in it surplus. is in surplus. Respondents Respondents were gloomy were gloomy about about the outlook the outlook for the for macro-economy the (No. 2), (No. 2), largely largely because because of uncertainty of uncertainty about about the future the future of quantitative of quantitative easing, easing, well as as well the as the cooling cooling of emerging of emerging market market growth growth and the and continuing the continuing crisis crisis in the in eurozone. the eurozone. Market Market conditions conditions (No.13) (No.13) in the in non-life the non-life insurance insurance market market have a have cycle a of cycle their of their own, and own, are and currently are currently depressed depressed because because of surplus of surplus capacity. capacity. Respondents Respondents gave a gave a mixed mixed view of view the of outlook, the outlook, some seeing some seeing rates hardening, rates hardening, others others commenting commenting that the that the low level low of level major of major claims claims and plentiful and plentiful capital capital would would keep conditions keep conditions soft. soft. CSFI / New York CSFI info@csfi.org Web: 5

10 Regulation is is the the top top risk risk for for the the third third year year running running Structural Structural and technological and technological change change in the in industry the industry ranks ranks high on high the on risk the risk Insurance Banana Banana Skins Skins list as list pressures as pressures for consolidation for consolidation (2013 (2013 ranking ranking brackets) in brackets) grow, grow, and digital and digital techniques techniques become become more more widespread. widespread. Concern Concern about about the the 1 Regulation 1 Regulation (1) (1) industry's industry's ability ability to manage to manage change change 2 Macro-economy 2 (3) (3) has risen has risen sharply sharply (from (from No.15 No.15 in the in the 3 Interest 3 Interest rates rates (-) (-) survey survey to No. to 6). No. 6). 4 Cyber 4 Cyber risk (-) risk (-) The top The concern top concern this on front this front is cyber is cyber 5 risk (No. risk (No. 4) which 4) which we rank we rank for the for the 6 Investment 5 Investment performance performance (2) (2) Change 6 Change management management (15) (15) first time first time this year. this year. As an As industry an industry 7 Guaranteed 7 Guaranteed products products (6) (6) that handles that handles large large amounts amounts of other of other 8 Distribution 8 Distribution channels channels (11) (11) people's people's money money and personal and personal data, data, insurance insurance is vulnerable is vulnerable to attack. to attack. 9 Natural 9 Natural catastrophes catastrophes (5) (5) Cyber Cyber is also is also an underwriting an underwriting risk risk 10 Quality 10 Quality of risk of management risk management (7) (7) which which has yet has to yet be to fully be scoped. fully scoped. 11 Business 11 Business practices practices (4) (4) 12 Quality 12 Quality of management of management (8) (8) The impact The impact of change of change in the in areas the areas of of 13 Market 13 Market conditions conditions (-) (-) distribution distribution and client and client interface interface has has also risen also risen as a concern as a concern (up from (up from No. No. 14 Long 14 tail Long liabilities tail liabilities (9) (9) 11 to 11 No. to 8). No. Much 8). Much of the of industry the industry is is 15 Human 15 Human talent talent (19) (19) struggling struggling to keep to keep pace pace with with new new 16 Political 16 Political interference interference (16) (10) technologies, technologies, and and incumbents incumbents feel feel 17 Product 17 Product development development (20) (20) threatened threatened by by new new entrants entrants unburdened unburdened by legacy by legacy systems. systems. 18 Reputation 18 Reputation (14) (14) Technology Technology is a common is a common theme theme in in 19 Climate 19 Climate change change (18) (18) virtually virtually the all major the major changes changes facing facing 20 Social 20 Social change change (-) (-) the industry. the industry. 21 Corporate 21 Corporate governance governance (17) (17) Among Among the large the large underwriting underwriting risks, risks, 22 Capital 22 Capital availability availability (16) (16) natural natural catastrophes catastrophes (No. (No. 9) are 9) are 23 Terrorism 23 Terrorism (27) (27) considered considered to be to the be most the most formidable, formidable, 24 though though they they have have slipped slipped from from the the 25 high high position position they they occupied occupied in the in the Pollution/contamination 24 (26) (26) Complex 25 Complex instruments instruments (23) (23) wake wake of the of bad the earthquakes bad earthquakes that that coincided coincided with with the last the survey, last survey, but but may now may be now underpriced be underpriced as risks. as risks. Climate Climate change change (No. 19), (No. terrorism 19), terrorism (No. 23) (No. and 23) and pollution/contamination (No. 24) (No. are 24) seen are to seen be to low be order. low order. An area An area of declining of declining risk risk the is governance the governance and management and of insurance of insurance companies. companies. These These were were seen as seen high-level as high-level risks during risks during the financial the financial crisis, crisis, but have but have fallen fallen sharply sharply in this in survey. this survey. Respondents Respondents reported reported big improvements, big partly partly as a as a result result of initiatives of initiatives from from the industry the industry itself, itself, but also but also under under strong strong regulatory regulatory pressure. pressure. Concerns Concerns remain, remain, however, however, particularly particularly over the over quality the quality of human of human talent talent in the industry the industry (up from (up from No. 19 No. to 19 No. to 15), No. and 15), its and ability its ability to attract to attract good good people. people. Another Another area of area declining of declining risk is risk reputation is reputation (down (down from from No. 14 No. to 14 No. to 18) No. as 18) the as the industry industry (and the (and regulators) the regulators) get to get grips to grips with bad with business bad business practices practices such as such missellinselling (down (down from from No. 4 No. to No. 4 to 11). No. However, 11). However, respondents respondents said that said much that much remains remains as mis- to be to done be to done improve to improve the industry's the industry's image, image, for example for example in claims in claims handling. handling. 6 CSFI / New York CSFI info@csfi.org Web:

11 Cyber Cyber risk is risk a is a dramatic dramatic new new entrant entrant Big movers Big movers This year s This survey year s has survey produced has produced dramatic dramatic changes changes in the ranking the of ranking some of some Banana Skins, Banana reflecting Skins, reflecting shifting perceptions shifting perceptions of risk in of a risk difficult in a market. difficult Here market. Here are some are of the some big of movers. the big movers. UP UP Interest rates Interest (new rates entrant). (new entrant). Persistent Persistent low yields low are yields hurting are performance. hurting performance. Cyber risk Cyber (new risk entrant). (new entrant). Vulnerability Vulnerability of the industry of the to industry attack to and attack and underwriting underwriting risk. risk. Change management. Change management. Can the industry Can the handle industry its handle huge change its huge agenda? change agenda? Human talent. Human The talent. industry The is industry insufficiently is insufficiently attractive attractive to young to people. young people. DOWN DOWN Capital availability. Capital availability. Capacity Capacity is in surplus. is in surplus. Corporate Corporate governance, governance, quality of quality management. of management. Insurance Insurance companies companies are now are now better run. better run. Reputation, Reputation, business business practices. practices. Industry conduct Industry and conduct image and are image improving. are improving. Type of respondent Type of respondent The survey The shows survey divergences shows divergences between between the concerns the concerns of different of different types of types of respondent. respondent. The ranking The of ranking regulation, of regulation, for example, for example, was the No. was 3 the concern No. 3 for concern both for both the life and the non-life and sides. non-life However sides. However it was No. it 1 was for No. observers 1 for observers (consultants, (consultants, analysts, analysts, academics academics etc.), suggesting etc.), suggesting that this that risk this not risk just is an not industry just an industry bugbear. bugbear. The life The life industry industry was particularly was particularly concerned concerned about low about interest low interest rates, investment rates, investment performance performance and the economic and the economic outlook, outlook, while the while non-life the side non-life and side the broking and the broking community community focused on focused underwriting on underwriting risk: cyber, risk: catastrophe, cyber, catastrophe, and climate and change. climate change. The reinsurance The reinsurance industry's industry's main concern main was concern excess was market excess capacity. market capacity. Geography Geography A breakdown A breakdown of responses of responses by region by also region showed also different showed different priorities. priorities. The strongest The strongest common common concern between concern between Europe and Europe North and America North America was interest was rate interest risk and rate the risk and the future of future QE. The of QE. two The regions two also regions focused also on focused the macro-economic on the macro-economic outlook and outlook on and on regulatory regulatory risk. Cyber risk. risk Cyber was risk a widespread was a widespread geographic geographic concern, concern, appearing appearing the in the Top Ten Top of all Ten major of all regions major except regions Latin except America. Latin America. Otherwise, Otherwise, risk priorities risk priorities were were very localised. very localised. Preparedness Preparedness Respondents Respondents were asked were how asked well how prepared well prepared they thought they the thought insurance the insurance industry was industry was to handle to the handle risks they risks identified. they identified. On a scale On of a 1 scale (poorly) of 1 to (poorly) 5 (well) to they 5 (well) gave they an gave an average response average response of 3.20, a of sharp 3.20, rise a sharp on the rise previous on the previous survey's 2.95, survey's suggesting 2.95, suggesting that that risk management risk management is seen to is be seen improving, to be improving, though there though are there still are concerns still concerns as to as to whether this whether trend this will trend stand will the stand test of the a difficult test of a business difficult business environment. environment. History. History. The results The of results past Insurance of past Insurance Banana Skins Banana surveys Skins provide surveys a provide useful guide a useful guide to evolving to evolving risk perceptions risk perceptions in the industry. the industry. A summary A summary of past results of past can results be found can be found on p. 33. on p. 33. CSFI / New York CSFI info@csfi.org Web: 7

12 Who Who said said what what A breakdown A of the of the results results by respondent by type type and and region region shows shows a strong a strong common common concern concern with with the the negative negative impact impact of new of new regulation on the on the insurance business, business, against against a background a of difficult of difficult and and fast-changing industry industry conditions. However However there there are also are also striking striking sectoral sectoral and and geographical differences. Common concerns about regulation, economic trends and and industry change Life Life insurance 1 1 Interest Interest rates rates The The life life sector s sector s main main concerns concerns are linked are linked to to 2 2 Macro-economy the economic the environment, particularly the the persistence of low of low interest interest rates rates and and their their 3 3 Regulation impact impact on savings on savings products products (such (such as as 4 4 Guaranteed products products guaranteed annuities) and and investment returns. returns Investment performance 6 Cyber Cyber risk risk Main Main concerns concerns about about the industry the industry are around are around the growth the growth of cyber of cyber risk risk and and changes changes 7 7 Distribution channels channels affecting affecting the structure the structure of the of industry, the industry, such such as as methods methods of distribution, of competition and and 8 8 Change Change management pricing. pricing. Concern Concern about about political political interference 9 9 Business Business practices practices centres centres on issues on issues such such as reform as reform of pensions of pensions Political Political interference and and health health care. care. Non-life Non-life 1 1 Cyber Cyber risk risk The The property property and and casualty casualty side side of the of the 2 2 Natural Natural catastrophes business business was, was, might as might be expected, be expected, 3 3 Regulation primarily primarily concerned with with underwriting risk, risk, especially the growth the growth of cyber of cyber risk risk and and the the 4 4 Change Change management continuation of high of high levels levels of catastrophe of 5 5 Macro-economy risk. risk. Climate Climate change change also also featured featured in the in top the top Interest Interest rates rates 7 Distribution channels channels ten. ten. As with As with other other sectors, sectors, the weight the weight of new of new regulation was was a strong a strong concern, concern, as was was 8 8 Quality Quality of management of structural structural and and technological change change in the in the business, business, particularly distribution. The The sector sector 9 9 Climate Climate change change was was less less concerned than than the life the life side side with with Investment performance investment and and yield yield issues. issues. Reinsurance 1 1 Market Market conditions The The reinsurance sector's sector's main main concern concern 2 2 Regulation centres centres on the on soft the soft conditions created created by by 3 3 Cyber Cyber risk risk excess excess capacity capacity and and "new" "new" types types of capital, of capital, e.g. e.g. hedge hedge funds, funds, and and what what many many see see as as 4 4 Interest Interest rates rates onerous onerous regulation of the of market. the market. The The lack lack of of 5 5 Natural Natural catastrophes a robust a robust and and well-defined market market for cyber for cyber Distribution channels channels 7 Guaranteed products products risk risk another is another top top concern. concern. Interest Interest rates rates rank rank high high because because low low yields yields affect affect investment 8 8 Investment performance returns; returns; so do so natural do natural catastrophes because because ultimately the reinsurers the bear bear the brunt. the brunt. The The 9 9 Quality Quality of risk of risk management quality quality of risk of risk management in insurance Macro-economy companies is a is further a further worry. worry. 8 CSFI / New York CSFI info@csfi.org Web: