Regulation among key concerns for insurance firms in 2024

Regulatory compliance and cyber attacks are among business’ biggest concerns for 2024, according to Amp Corporate Communications.

In new research published yesterday (30 January 2024), the data specialist highlighted the top five reputational risks for finance and insurance firms.

The biggest worry for firms was regulation, with 48% concerned about the consequences of not complying.

Several new regulations have been imposed on the insurance industry in recent years, such as the general insurance pricing reform in January 2022.

This aims to protect consumers by abolishing price walking, preventing insurers from offering cheaper policies to new customers while increasing prices for existing policyholders.

And the Consumer Duty regulation, which was introduced in July 2023, requires insurance firms to review their products and services against a new standard of fairness.

“When it comes to compliance, the cost of getting it wrong can have massive consequences – both financially and reputationally – so firms need to carefully consider what their risks are and what needs to be done to effectively manage them,” Philip Naughton, chief executive of consultancy Cosegic, said.

Other concerns

Cyber attacks ranked as the second biggest concern, with 38% of businesses worried about the financial repercussions.

Firms ranked malware, ransomware and phishing as the incidents expected to be most common during 2024.

The same number of business cited concerns about service issues, such as a system outage, customer complaints and employee error, while 36% of companies said data breaches leading to customers’ personal data being compromised was a worry.

And 20% said financial instability could be an issue in 2024 amid economic uncertainty.

James Borley, managing director of payment services at Cosegic, said: “Macroeconomic challenges still in play in 2024 will likely continue to squeeze capital and liquidity at firms, such that they experience stresses that could be fundamentally fatal to them.”

Prepared?

However, the research also found firms may not be fully prepared to deal with such risks.

For example, figures showed that less than a third of UK businesses (29%) have a crisis communications plan, only 25% have media trained spokespeople and just a fifth of businesses (20%) have effective communications processes in place for sharing information with stakeholders.

Founder of Amp Corporate Communications Dee Gallagher said: “Businesses need to be examining the risks specific to their organisation and industry, then setting up processes to assess, manage and respond to reputational challenges.”