Newspaper article The Evening Standard (London, England)

Insurers Are off the Pace in a Changing World

Newspaper article The Evening Standard (London, England)

Insurers Are off the Pace in a Changing World

Article excerpt

Byline: Anthony Hilton city comment

FOR the past 50 or 60 years, all the pressure in business has been towards convergence standardisation of products and technologies, internationalisation of sales, globalisation of supply chains. All the world's great companies have locked into the same trends, pursued the same themes, organised themselves in broadly the same way and sent their bright young executives to the same business schools. They don't all look alike but they tend to think the same way and are increasingly hard to tell apart.

But in a telling observation, Ian Powell, chairman and senior partner of accounting and business services group PwC, thinks the trends may be reversing, with convergence giving way to divergence. It may be a trend or it may simply be a short-term reaction to the pressures the business world has faced since the global financial crisis. It is too early to tell but there is already an interesting accumulation of evidence.

Globalisation has stalled. Bilateral, rather than multinational, trade deals are making a comeback. Regulation remains resolutely national. Regional differences are reasserting themselves and there is a resurgent nationalising in politics while religious differences and tensions are coming to the fore around the world. It is no longer necessarily an advantage in many parts of the world to look and sound like an American firm. The phrase too big to manage is used increasingly. In the mix between local skill and knowledge and international clout, the firm that can make a passable imitation of being local is reclaiming lost ground.

This may partly explain why international business services groups are doing so well companies need help to adjust to this change in climate. It might also help explain why, as highlighted in the annual business risks survey published this week by insurer ACE, the insurance industry appears to be struggling to meet its multinational clients' needs.

The survey was unexceptional insofar as the three emerging risks that are the biggest concerns of business were the three you would expect them to be most concerned about. First is cybersecurity and technology; supply chain issues come second, and regulatory and compliance issues third. But while multinational companies think the insurance industry should be playing a key role in helping them manage these risks, they are pretty unhappy with what is on offer so far.

For example, technology risk currently absorbs more management time than any other risk and it is believed it could have the most financial impact if it goes wrong. But it is also the area where clients think the insurance offer most needs to improve.

In defence of the insurance industry, these can be extremely complex risks but complexity has never been that much of a problem for the London market in the past. …

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