Insurance
As the leading provider of professional services to insurance organisations, PwC has extensive knowledge of the issues, trends and challenges that insurers face.
Technology, crime and change management continues to dominate Singapore’s insurance industry risk landscape
The pandemic has shown how a single event can disrupt the entire world. Although COVID-19 has not yet altered the insurance risk landscape drastically, it has certainly amplified the magnitude of risks in many ways.
Technology
- Identified as Singapore’s insurance industry top risk in 2021 survey.
- Moved up one spot from 2019 survey results. It takes 1st slot in Asia Pacific and 3rd position globally.
- Technology modernisation comes with a cost. Juggling multiple technology modernisation projects can put a strain on the insurers.
- Talent shortage impacting digital transformation initiatives.
Crime
- Second most recognised Singapore insurance sector risk.
- Moved down one spot from 2019 survey. It takes 2nd spot in Asia Pacific as well and top slot globally.
- Rapid digital transformation and remote working arrangements driven by the pandemic have brought about increased cybersecurity risk.
- As insurers move to digitalise most processes with greater reliance on automation, it is imperative that new processes and controls are designed properly with IT and data vulnerabilities comprehensively considered.
Change management
- Consistently ranked as the 3rd most risk concern in Singapore.
- Ranked lower, taking 5th slot in Asia Pacific and 7th globally.
- Many of the top risks such as technology, crime, regulations, climate change and human talent have bearing on change management.
- The relatively smaller scale of the Singapore operations compared to some of their global peers can present both opportunities and challenges to the Singapore insurers.
Anxiety level in Singapore’s insurance industry above global average. Local industry players feels less prepared to handle risks.
Figure 1: The Banana Skins Indices, Singapore, 2019 - 2021 (scale of 1 to 5)
| Banana Skins index | Preparedness index | ||
|---|---|---|---|
| 2019 | 2021 | 2019 | 2021 |
| Singapore – 3.44 | Singapore – 3.37 (▼by 0.07 points) |
Singapore – 3.14 | Singapore – 3.10 (▼by 0.04 points) |
| Global – 3.33 | Global – 3.19 (▼by 0.14 points) |
Global – 3.11 | Global ౼ 3.22 (▲by 0.11 points) |
Source: Insurance Banana Skins 2021
- Although this year’s survey shows a decline in the anxiety level faced by Singapore insurance industry players compared to the previous survey in 2019, it remains above the global average.
- Singapore showed a slight deterioration in the Preparedness index – which reflects how prepared the industry is in handling risks identified this year compared to 2019.
Other notable risks gathering momentum in Singapore
Regulation
- Significant rise to 5th position from 12th in 2019.
- Reflection of the approaching effective date of IFRS 17 on 1 January 2023.
- In response to new or revised regulations, businesses need to conduct detailed gap analyses and implement action plans.
Climate change
- At 6th spot, up 8 notches from 2019.
- Environmental, Social and Governance (ESG) is a key focus area for corporates and regulators around the world.
- Developing the ESG strategy and integrating ESG and climate risks into business and risk management processes are key focus areas for the insurers.
"Technology, crime and change management remained as the top 3 risks for Singapore's insurance landscape. It would appear that we are still very much grappling with technological and digital advancements - trying to keep pace and move as quickly as we can to ensure we stay relevant to our stakeholders. Change management continues to be rated high for Singapore which begs the question as to whether there is an appropriate mindset shift to embrace the changes that need to happen."
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