In its 2021 EMEA-wide Life Financial Modelling Survey, WTW reveals that many life insurers are under significant pressure from regulators and management to improve their financial reporting, exacerbated by key barriers to adopting cloud technologies capable of transforming their modelling capabilities.
While participating firms said they were satisfied with their current financial modelling, the demand for ever increasing and faster reporting is causing concern for many insurers, with this pressure being most evident for multinationals. Firms taking part in the survey highlighted three barriers in particular that they will first need to overcome in order to meet this demand for improved speed and efficiency: • Managing costs – Companies are under constant pressure to improve operational efficiency and meet the demand for real time services, but at ever decreasing costs. • Shortage of skilled resources – Having the right skill set and software is essential said survey respondents, particularly compared to the situation for companies still using old, obscure, or bespoke toolsets. • Improve governance and auditability – The challenge of updating financial modelling practices that not only deliver faster but are also capable of delivering a greater level of control and auditability. More than 90% of survey respondents recognised that the application of automation technology – including business process automation, elastic cloud computing and Software as a Service (SaaS) – is a key priority to address these challenges. At the same time, a number of participating firms were cautious of the changes needed to implement new technology, naming transition cost, data and IT policies, and technical challenges as the main barriers to adoption.
The difference between the mean retirement income of men and women aged 65 and over currently stands at an average of 26% across OECD countries, however in the United Kingdom it is even higher than that at somewhere between 34% and 43%.
There are many reasons for this gap, both economic and societal, and the report gamely provides an analysis of them all. Ultimately however, the greatest impact is down to the differences in work patterns between male and female employees. Women in the OECD have on average a career which is a third shorter than that of men and are much more likely to be working part time. On top of this they are paid less for the work they do, with the gender pay gap standing at 13%, a difference that, unsurprisingly, starts to appear between the ages of 24 and 35 when women are most likely to take a career break in order to raise a family.
Third tier pension contributions are strongly correlated with earnings and so women tend to save lower amounts and for less time.
Only in the event of a tragic Covid-19 scenario, seeing continued substantial additional deaths for many years would there be a significant reduction in UK DB scheme liabilities, according to a new report from LCP.
While LCP believes that the financial impact on DB schemes of direct deaths from the first two Covid-19 waves is likely to be marginal, it outlines several other scenarios around the pandemic’s longer-term impact on mortality rates and scheme labilities. The range of outcomes illustrates the challenges of choosing an appropriate mortality assumption at the current time, with much uncertainty over how Covid-19 will play out.