Climate change tops insurance risk list: Ernst & Young

    TORONTO, March 24 /CNW/ - Insurance companies need a strong grasp of
current trends to successfully manage risk, optimize performance and increase
operational effectiveness. Ernst & Young's global industry professionals
compiled the following top 10 insurance company risks to help companies
navigate challenges and meet their goals in the year ahead.1.  Climate change is the greatest strategic threat facing the insurance
        industry. Global warming causes changes in weather patterns and
        shifts the underlying probability of insured loss from floods, wind
        storms and other natural phenomena. Insurers may be forced to
        scrutinize their insurability criteria. Climate change also affects
        pricing structures, reserving policies, solvency and corporate
        viability, as well as more gradual consequences like increased health
        problems.

    2.  The baby boomer generation is causing a demographic shift with huge
        ramifications for the insurance industry. As this group reaches
        retirement age, their financial needs change and they need new
        products to fill the gap. Because current generations may not have
        sufficient funds for retirement, insurance companies are stepping
        into a role traditionally played by governments. That means insurers
        are facing intense pressure in cases of failure, intensified public
        scrutiny, and greater regulatory pressures.

    3.  The rising cost of catastrophic events could impact insurers'
        earnings and capital. Changing weather patterns, terrorist attacks
        and pandemics are primary concerns.

    4.  Emerging markets represent a risk and an opportunity for insurers.
        Success is not guaranteed, and new competitors from these markets
        could threaten a number of today's leading global players.

    5.  New regulatory developments and increased scrutiny could lead to
        changes in operations and underwriting practices. Regulatory
        intervention driven by political factors could become a major risk.

    6.  Technology has changed the way insurance services are sold, and the
        internet now poses a significant risk for insurers. Companies with
        multi-channel access for sales and information may have a competitive
        advantage.

    7.  There appears to be a lack of integration between technology,
        operations and strategy. Insurers need to view technology as an
        enabler and keep pace with the competition.

    8.  Increasing pressures from securities markets could have serious
        consequences if not carefully monitored. New players are entering the
        market and blended products are challenging the position of
        traditional insurance companies.

    9.  Legal uncertainties over liability, tort reform and other issues
        could threaten a company's standing or result in financial loss.

    10. The potential for geopolitical or macroeconomic shocks is a real
        industry risk. The threat of a financial meltdown resulting from
        derivatives and hedge funds is a major concern.About this list

    Ernst & Young collaborated with Oxford Analytica to explore strategic
business risks for 12 of the world's most important sectors, including
insurance. The top 10 risks provided here are the result of discussions
between Ernst & Young's global analysts and leaders from more than
20 disciplines that shape the environment.

    About Ernst & Young

    Ernst & Young is a global leader in assurance, tax, transaction and
advisory services. Worldwide, our 130,000 people are united by our shared
values and an unwavering commitment to quality. We make a difference by
helping our people, our clients and our wider communities achieve potential.

For further information: Amanda Olliver, [e-mail], (416)
943-7121; Julie Fournier, [e-mail], [phone]; Kelly
Peace, [e-mail], [phone]