New Zealand insurance companies place change management , technology and competition as their three biggest risks, according to report by the international accounting and professional services firm PwC.
PwC partner and insurance sector leader in New Zealand Karl Deutschle said competition was ranked unusually highly by local players compared to their overseas peers.
But he said it was not surprising – FinTech start-ups are bringing in new technology to the market and those new companies are not held back by the same legacy systems and outdated business models some insurance firms are still working with, reported stuff.co.nz.
"Insurers are well aware that they need to build solutions and products that are focused on the customer," he said.
"However, their biggest challenge is to convert that awareness into reality. The smaller disruptors are able to focus on a specific customer solution and deliver this quickly and seamlessly. The bigger incumbents still need to master this speed to market."
He said New Zealand insurers also rated reputational risk more highly than did their international peers.
"It's number five in New Zealand and I don't think it makes the top 10 overseas in global results.”
Local insurers were also worried about regulatory risk – the sector has been through a lot of change as the Reserve Bank reviewed its requirements of insurers, the Financial Advisers Act was reviewed and the EQC Act was put in the spotlight.
"The insurance sector has been in a state of disruption since the Christchurch earthquakes in 2010 and many of the changes mentioned above have been as a result of an increase in natural catastrophes in New Zealand.
"However, thanks to our stable political system, the risk of political interference is perceived as being quite low," Mr Deutschle said.
Financial risks were increasing as a concern, as insurance companies struggled to get good returns on their investments due to low interest rates.
"Shareholders will be still be demanding similar returns on capital and this has to be delivered by improving underwriting profits. Winning and retaining more business with better margins is the new norm."