Insurance industry profit practically at a standstill

actualités cybersécurité

In a new report, analysts at management consulting firm McKinsey have warned that insurance industry profits are “practically at a standstill” due to longstanding economic challenges.

Examining the industry in the wake of the COVID-19 pandemic, McKinsey concludes that half of insurers globally are not earning their cost of capital, and half are trading below book value.

“After decades of stable returns, insurance is now a value-destroying industry in which half the players do not earn their cost of equity,” it asserts.

The impact of the pandemic on insurers was clearly noticeable in 2020 as COVID broke out, when premium growth slowed from more than 4% annually to just 1.2% and profits fell by 15%.

Declining profits were particularly pronounced in Asia Pacific, where insurers suffered a 36% decrease due to challenges on the life side of their business.

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