Some concerns vary widely among regions.

The trends are real. Are you ready?

In the spring of 2013, Towers Watson, in cooperation with the International Insurance Society (IIS), surveyed more than 500 insurance executives, academics and others to identify megatrends most likely to impact the business over the next several years.

Insurance Industry Megatrends Forces that will shape the future of the global insurance industry

Selected findings

• In the short term, survey respondents are most worried about capital management challenges and the impact of regulations and government policies. • Over the next five years, however, respondents become comparatively more concerned about other trends, notably demographic change (especially among life insurers) and the impact of big data (especially among the non-life industry). • For all of the excitement around social media, fewer than one-quarter of respondents see the emergence of social media as having a significant impact on their business.

Increased role of advanced technology such as predictivemodeling and “big data”

Increasing power of the consumer as a result of social media

Shifting demographics,including increased longevityand aging populations

In the next two years In the next �ve years

Which trends will have the most significant impact on your business?

26%19%

35%40%

21%15%

In the Asia Pacific region, respondents are far more focused on talent issues and changing regulations while paying somewhat less attention to capital management issues and big data.

Americans are much more likely to worry about capital management and big data, and much less concerned about social media and emerging markets.

Europeans are less likely to worry about talent shortages and big data but are more worried about the volatile economic environment and changing regulations.

• Respondents show high comfort levels with their ability to address capital management challenges and regulatory change. • Confidence falls sharply when asked about their preparations for the impact of big data, looming talent shortages, the rise of social media and increased geopolitical instability around the world.

Poised to leverage Not currently prepared

Prepared to handle Little or no way to prepare

Somewhat prepared

How prepared is your company?

Growth in demand for insurance products in emerging markets

Increasing power of the consumer as a result of social media

Increasing challenges of talent attraction and retention in the industry

Increased role of advanced technology such as predictive modelingand big data

16% 16% 43% 23% 2%

6% 27% 40% 25% 2%

8% 21% 36% 32% 3%

31% 35% 19% 10% 5%

Nearly 75% of respondents see the global insurance industry becoming more concentrated as it addresses the impact of megatrends.

Much more fragmented

Somewhat more fragmented

About the same

Somewhat more concentrated

Much more concentrated

3%10%10%

14%

63%

towerswatson.com

What potential “black swan” events are out there — potential developments or trends that the insurance industry has failed to recognize?

With their focus on capital management and regulations, are insurers paying too little attention to the competitive advantage — or disadvantage — of new megatrends, such as big data?

Are insurers facing up to the new talent demands that will increase as companies embrace more sophisticated technology and social media?

The research raises a number of questions.