Low interest rates, pressure on pricing, M&A activity, and disruptive technology are all shaping the outlook for the risk and(re)insurance industry for 2016. Here, WRIN.tv summarizes several of the recent forecasts published by industry analysts and thought leaders.
Swiss Re sees economic momentum supporting growth in the insurance sector, even with headwinds like slower growth in China, lower commodity prices and interest rate actions by the Fed. (Click here to see the full report.)
Wells Fargo believes there will be positive underwriting gains for Commercial Lines as well, despite rate reductions and low investment returns. Click here to see the full report.
EY warns of further disruption from technology and slower overall economic growth. Click here to see the full report.
Willis believes rates for commercial insurance will further soften, while consolidation will be a challenge to insurance buyers. Click here to view the full report.
Capital IQ reported M&A deal volume in the global insurance sector totaled $89 billion with 770 deals in 2015, an increase in of 187 percent in deal value. Click here to view the full report. (http://www.spcapitaliq.com/documents/our-thinking/research/trends-and-ideas-insurance-predictions-for-2016.pdf.
Moody’s has a stable outlook for the global life and P&C industries, but the outlook for global reinsurance is negative, due in part to excess capacity and shrinking demand. Click here to view the full report.
Guy Carpenter reported the pricing declines on most lines of reinsurance, and within most geographies, but they say declines moderated somewhat, particularly on US property catastrophe risks. Click here to view the full report.
Aon Benfield reported Cat bond issuance for 2015 at 6.9 billion. While contracting a bit from 2014, total Cat bonds on-risk reached a record 24.4 billion by year’s end. Aon Benfield also noted that regulation, the global economy and M&A activity continue to affect the insurance and reinsurance market. Click here to view the full report.
Apart from the recent interest rate hike, there are reasons to be optimistic about the industry’s prospects Zack’s Investment Research sees the overall health of the industry improving. While insurers are relying on expense-savings to tread water, if they overcome short-term resistance to rate increases, they should ultimately witness margin expansion. And in the absence of federal regulation, insurers can take on new challenges with the ample capital that they now have. Click here to view the full report.