The biggest hurdle to executing capital utilization plans for P&C insurers? Technology, according to 44% of respondents in Towers Watson in its "P&C Insurance CFO Survey."
Chief financial officers also say that data, human resources, know how and timing (all 30%) are the next biggest challenges to implementation.
To address that need, half of all respondents plan to add additional capital deployment to analytics, data and other technology-related areas in the next one to two years. CFOs say they are somewhat or very likely to invest in core systems in pricing (74%), underwriting (74%), marketing/sales/distribution (65%), product development (65%) and claims management (65%).
But CFOs are relying on their companies' financial strength. At 61%, this clearly ranks as the primary driver of capital use. At a distant second and third, opportunistic ventures (30%) and market demand for traditional products and channels (26%) also are factors.
"The focus on financial strength, however, seems to be supported by CFOs' concerns about the risks inherent in loss reserves," says Alejandra Nolibos, director in Towers Watson's P&C business. "They see reserve releases that may dry up soon and fear a turn in the relatively benign claim environment we've experienced in the last decade."
Indeed, the survery reports that 70% of respondents say that reserve redundancies will run out within the next three years, which is on the minds of most. Three-quarters of CFOs are extremely or moderately concerned about unexpected costs trends in the social, legislative and judicial environment, and 65% worry about general claims and cost inflation.
Towers Watson provided an infographic of survey highlights. Click to expand.
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