Managing change within industry ranks as the biggest risk for insurers in India, reveals CFSI’s Insurance Banana Skins 2015

  • India findings in sharp contrast to overall global results which cite Regulation as a major risk
  • India’s ‘above average’ score on the Banana Skins Index implies a higher level of risk anxiety; scores above average on the Preparedness Index as well implying a higher level of risk preparedness

Mumbai, 15 July 2015 - A new survey charting the top risks in the global insurance sector shows that insurers in India perceive managing change in the industry as the top risk to their business. Also rating significantly higher than the global average were the risks around governance, such as the quality of risk management.

On the other hand, regulation came in bottom of the risk rankings in India, with more stringent capital requirements generally seen as strengthening the industry. The economic environment was also a lower order concern, with positivity about India’s growth and inflation under control.

This is quite in contrast to the overall global findings where regulatory concerns emerged as the overall top risk for participants in the survey for the third successive time, underlining the deep impact regulatory change is having (Comparison chart of India and global rankings on page 2).

The CSFI’s latest ‘Insurance Banana Skins 2015’ survey, conducted in association with PwC, polled over 800 insurance practitioners and industry observers in 54 countries (including India), to find out where they saw the greatest risks over the next 2-3 years.

Sharing his thoughts on India findings, Anuraag Sunder, Director,  PwC India said, “Respondents from India perceive regulation as the least important risk and this could only be a reflection of the new reality where post the FDI changes, industry has accepted the new set of regulations as 'new normal'. They are now more focused on 'Change management', which is ranked as the top business risk. Fast paced changes on the ever-evolving customer side and increasing demand of digital interface is also a reflection of 'change management' that insurers would need to walk through.

Cluttered at the top are financial risks (exposure through long term liabilities and investment performance) and human capital risks (quality of management and human talent), signifying lack of confidence on the talent pool”, Sunder added.

As India’s customers continue to adopt technology in a big way, adapting to their ever-evolving expectations, especially from a technology standpoint was high on the priority list of the respondents. On the non-life side the absence of any common data platform to make informed decisions was an area of concern.

Technology was widely seen as the driving force behind new markets, changing customer demand, and facilitating competition from non-traditional entrants. While the need for insurers to respond to change is nothing new, many respondents saw the current challenges demanding special urgency.

The concern raised is that the traditional insurance industry will be slow to grasp the opportunity and will end up facing a threat. Developments such as digitisation, the internet and social media are already profoundly influencing price and demand for insurance products, and the means customers use to interact with their insurance providers.

In the overall rankings, India scored above average on the Banana Skins Index (India at 3.31 and global at 3.21), implying a higher level of risk anxiety. It scored above average on the Preparedness Index, implying a higher level of risk preparedness (India at 3.27 and global at 3.20).

The Banana Skins Index measures the average score given by each country to the 25 risks listed in the questionnaire. The higher the score, the greater is the implied “anxiety level”. The Preparedness Index measures the average response given to the question: “How well prepared do you think the insurance industry is to handle the risks you identified?” where 1=Poorly and 5=Well. The higher the score, the greater is the implied level of preparedness.

Insurance Banana Skins 2015

World India
  1. Regulation
  2. Macro-economy
  3. Interest rates
  4. Cyber risk
  5. Investment performance
  6. Change management
  7. Guaranteed products
  8. Distribution channels
  9. Natural catastrophes
  10. Quality of risk management
  11. Business practices
  12. Quality of management
  13. Market conditions
  14. Long tail liabilities
  15. Human talent
  16. Political interference
  17. Product development
  18. Reputation
  19. Climate change
  20. Social change
  21. Corporate governance
  22. Capital availability
  23. Terrorism
  24. Pollution/contamination
  25. Complex instruments
  1. Change management
  2. Long tail
  3. liabilitiesInvestment performance
  4. Cyber risk
  5. Quality of management
  6. Human talent
  7. Product development
  8. Business practices
  9. Guaranteed products
  10. Reputation
  11. Quality of risk management
  12. Natural catastrophes
  13. Corporate governance
  14. Capital availability
  15. Climate change
  16. Complex instruments
  17. Interest rates
  18. Social change
  19. Distribution channels
  20. Macro-economy
  21. Market conditions
  22. Terrorism
  23. Political interference
  24. Pollution/contamination
  25. Regulation

Higher concerns:

  • Long tail liabilities: Has the potential to erode companies’ net worth if not provided for or re-insured
  • Reputation: Industry seen as particularly vulnerable to negative social media coverage.
  • Human Talent: Quality of manpower is a challenge – industry has not been able to attract talent.
  • Quality of management, Business Practices: Governance risks a worry.

Lower concerns:

  • Regulation: Capital requirements could strengthen the industry.
  • Macro-economy, Interest rates: India’s recent economic performance has been promising.
  • Market Conditions: “Insurance cycle is affected, but not much as penetration is still shallow.”

Notes to Editors:

  1. For further information, contact:
  2. PwC India , Nandini Chatterjee , Executive Director – CorporateCommunications,PwC India , Tel: +91 (124) 4620661, Email:
  3. CSFI  , David Lascelles  , CSFI , Tel: +44 (0)20 7621 1056 or +44 (0)7710 088658,Email:
  4. The Insurance Banana Skins 2015 survey was conducted in March and April 2015 and is based on 806 responses from 54 countries. The breakdown by type of respondent was:
Non-life 34
Life insurance 27
Reinsurance 6
Brokers 5
Observers 28

5. The survey is the latest in the CSFI’s long-running Banana Skins series on financial risk. Previous Insurance Banana Skins surveys were in 2007, 2009 2011 and 2013. It can be downloaded from PwC’s website: or the CSFI website:

6. The CSFI (Centre for the Study of Financial Innovation) is a non-profit think-tank, founded in 1993, which looks at challenges and opportunities for the financial sector. It has an affiliate organisation in New York, the New York CSFI.

7. PwC is a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. More information is available at the firm's website,

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