We asked 18 members of our Actuarial team to tell us what they consider some of the big issues will be in 2018, and how they will affect the insurance industry.
- Increased population density in cities, political instability, microbial drug resistance and changing transmission mechanisms for pathogens are pointing towards a long-overdue pandemic. - Dewi James
- There is general consensus that climate change is a real phenomenon and will alter our way of life. A key contributor to climate change is the use of fossil fuels, and finding effective and sustainable energy alternatives is at the forefront of scientific research and investment. - Gokul Chandrasekaran
- Plastic pollution has grown rapidly in the last few decades. Currently the level is not high enough to warrant concern about significant effects on human health but it may be a major concern in the coming years. Prior risk identification would enable a proactive rather than a reactive measure. - Richie Lahoti
- India is one of the world’s leading agriculture-based economies with 65%+ of the domestic population relying on agriculture for its livelihood. India is also a major net exporter of agri-products and the insurance sector plays a major role in safeguarding the well-being of hundreds of millions of farmers and their dependants. Natural catastrophes have huge social and economic consequences and developing better knowledge of these phenomena is an important part of the national safety-net. - Darshan Patel
- Data science represents a major opportunity for actuaries, the profession, and the insurance industry. The Institute and Faculty of Actuaries (IFoA) is changing the exam syllabus to reflect this, and has a working party looking into how actuaries embrace it and the opportunities it presents. - David Edison
- The smart era is coming – there is no better time to be in this industry as insurance and technology start to take off harmoniously. Actuaries face new challenges and opportunities such as artificial intelligence, machine learning and deep data analytics. - Xiaoli Chen
- Driverless cars will be properly tested in the UK as early as 2018 – in other parts of the world, they are expected to be made available on the market as soon as 2020. The insurance industry can expect a more competitive market as car accidents become less frequent and premiums drop, but are UK insurers prepared for this new technology? - David Causon
- Cyber risk covers the losses relating to damage to, or loss of information from, IT systems and networks. Technology is part of everything we do and while the increase in technology opens up a wealth of possibilities, it also creates huge potential for cyber risk. - Leo James
- The GDPR comes into force on 25 May 2018 to strengthen and harmonise data protection for individuals within the EU. It will replace the current Data Protection Directive (1995) and unlike a directive, it will be immediately effective from that date. - Gayatri Patel
- In a Solvency II world, the regulator and stakeholders seek to gain confidence over the results, design, workings and other processes within the Internal Model (IM). The PRA and Lloyd's require a certain set of actions to be taken to ensure that the IM provides a realistic and robust assessment of all the material risks faced by the organisation. - Athina Vitsela
- IFRS 17 (International Financial Reporting Standard 17) was issued by the International Accounting Standards Board (IASB) in May 2017 and will be effective as of 1 January 2021. A number of changes have been made under the new model to enhance consistent accounting for all insurance contracts and to increase transparency in financial information reported by insurance companies. - Jasraj Kalsi
- Insurance premium tax has more than doubled in six years, from 5% at the beginning of 2011 to a substantial 12% today. As it still sits significantly below VAT, it looks to have become a sitting duck when it comes to raising taxes to meet government spending plans. - Jamie Bentley
- On 27 February 2017, the Lord Chancellor announced a change in the Ogden discount rate from 2.5% to -0.75%. The decision caused great surprise and has a significant impact on the year-end P&L and balance sheet for many insurers. It is now being reversed following consultation with the industry and related stakeholders. - Sagar Saha
- Periodic Payment Orders (PPOs) are a type of compensation in the UK where payments are made to an individual to pay for care and other costs for as long as they live. The liabilities are long-term and pension-like in nature due to the longevity risk present, especially with improvements in medical science. - Tabo Mirza
- No lawsuits have been won or lost yet, but exposure to diesel is nonetheless an emerging risk that may be worthy of consideration by carriers that write employers' liability. - Santiago Restrepo
- The supreme court ruling in Plevin v Paragon Finance Ltd has had a far-reaching impact on the insurance industry, with a large amount of PPI complaints expected over the next year until the deadline set by the FCA – could this mean the end of PPI claims? - Omar Ripon
- Nothing is more expensive than a missed opportunity. After a long period of deliberation, thousands of pages of proposals and hundreds of millions of pounds spent in preparation, the Solvency II Capital regime is well and truly part of European insurers' operating environment offering significant opportunities for value-enhancing M&A activity. - Marios Georgiou
- Effort put into finding the right prior loss ratios holds the key to making actuarial teams add value, not just in reserving, but in underwriting portfolio strategy. - Gareth Hogley
We have the know-how and expertise to help you prepare for, any of the issues we've outlined, or any other issues you may be concerned about. With 2018 nearly here, we know that some of these issues could already be affecting you, in which case please do get in touch so we can agree how best to support you.