General Industry Insurance Overview - Article Analysis Essay

Introduction

The article seeks to give a review of the general insurance industry for the year 2016. There wes a 2.5% increases in gross written premium despite the present competitive pressures. The insurance profits increased by 17.5% which demonstrated reduced claims costs. The rate of catastrophe gained normalcy which was reflected by a 2.6% reduction in loss ratio. Despite the presence of competitive pressures, cost discipline was unaffected. The capital ratio for the year 2016 was 1.74 times compared to 1.75 for the year 2015 (Guse & Blake, 2016). In this sector, there are some emerging trends affecting operations. These emerging trends are categorized into new technology, new products and markets, new insights and new approaches. From a new technology perspective, there is growing momentum in InsurTech which will offer new opportunities for the industry. There are new payment platforms which have made possible real-time, data-rich payments. There is also the development of block-chain technology, which is considered to have high transparency and will promote innovative business models and potential enhancement in fundamental business processes. From new products and markets, there has been the development of autonomous cars, which is shifting the liability to manufacturers instead of humans.

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There is the development of Telematics whose benefits has been realized in other countries. The benefits such as instant cash notifications and convenience and control of premium among others can be realized by the sector in Australia (Guse & Blake, 2016). If there is the development of a sophisticated model in cyber insurance, the market can effectively transfer risk. From new insights perspective, there is the presence of big data can potentially help the industry through the creation of enterprise data management function, promoting a culture of experimentation, and the institution of data governance model. There is also the emergence of new approaches such as the new accounting standard IFRS 4.

The article is on the subject of managerial accounting which is critical to management. It offers a process in which business costs and operations are examined for the preparation of internal financial report, accounts, and records to help in the decision-making process. The result is an enhancement of the possibility of achieving business goals. Concerning the general insurance sector in Australia, the author was very articulate in giving a complete overview of gains and losses for the year 2016. Additionally, top ten trends in the industry have been examined describing their effects and potential implications for the industry. I agree with the author's point on reasons that have led to improvement in the sector despite the increased competitive pressures. The article provides information on issues that can be directly applied in other sectors.

Reading an article by PwC concerning facts and figures of the insurance industry, there is a description of drivers causing change. These include variation in social behavior, technological development, changing the political and regulatory environment and long-term low economic growth prospects (Fergusson 2016). This shows that these changes have a great impact on the sector. Another article provides an overview of the industry in 2018. It is explained that insurers are still focusing on developing top-line sales, bottom-line profitability and dealing with challenges thereby competing favorably in the changing industry. The changes in the industry include technology innovation, increased customer expectations and disruptive entrants (Matruglio & Calipo 2018). These two articles offer information to complement the main article which shows various changes affecting the industry and appropriate responses.

References

Fergusson, S. (2016). Insurance facts and figures. Retrieved from https://www.pwc.com.au/publications/assets/insurance-facts-figures-may2016.pdf

Guse, S., & Blake, M. (2016). General Industry Insurance Overview: With the Top 10 emerging trends impacting the sector. Retrieved from https://assets.kpmg.com/content/dam/kpmg/au/pdf/2016/general-insurance-industry-review-2016.pdf

Matruglio, P., & Calipo, A. (2018). 2018 Insurance Industry Outlook | Deloitte. Retrieved from https://www2.deloitte.com/au/en/pages/financial-services/articles/insurance-industry-outlook-2018.html