Many insurance companies feel inadequately prepared to facecertain trends that will impact the industry in the coming years,including the rise of social media and "big data," according to anew survey by Towers Watson, a global professional servicescompany.

Respondents around the world who participated in the InsuranceMegatrends Survey believe trends related to capital management,regulatory constraints, and economic volatility are of greatestconcern for the next several years, and a majority of respondentsfeel their companies are well prepared to address thesechallenges.

However, respondents feel they are less equipped to manage someimportant emerging trends—notably the impact of social media (29percent), the role of advanced technology such as "big data" (32percent), and workforce challenges around talent attraction andretention (33 percent).

"A focus on capital management and regulations is familiarterritory for insurance companies and therefore the leastsurprising finding in our survey," says Tricia Guinn, managingdirector, Risk and Financial Services, Towers Watson. "On the otherhand, the rather low priority given to new and emerging trendsraises the question of whether insurers are devoting enoughattention to issues that may have a huge impact on the industrydown the road."

As an example, Guinn noted the increasingly rapid adoption ofnew technologies by consumers of all ages.

"Not only is a whole new generation coming along that will makeits insurance-related buying decisions differently thanks to theInternet and social media, the current insurance-buying consumer isembracing these technologies, too." She says. "While insurers havean important role to play helping current and future generationsachieve financial security, they need to quickly accelerate theirstrategies regarding emerging technologies or risk losing out tocompetitors both within and outside the insurance industry."

The survey, conducted in cooperation with the InternationalInsurance Society, looked at the trends of most concern to insurersin each geographic region and how well prepared they are to addressthe impact of these trends. The survey asked respondents to ranktrends by impact over the next two years and then over the nextfive years.

In the longer time frame, insurers become increasingly moreconcerned about emerging trends; however, the regulatoryenvironment (47 percent) and economic volatility (44 percent) againranked as two leading concerns five years out. More than 500insurance experts participated in the global survey.

"I would be surprised if low interest rates and economicuncertainty will still be considered top impact issues in 10 years'time. That would mean the status quo has succeeded over creativity,fresh perspective, and potential game changers," says MarkSaunders, Risk Consulting practice leader, Towers Watson, AsiaPacific. "And I do think the industry is ripe for a disruptive gamechanger—one that will dramatically improve the industry's image andreputation by promoting the 'good' and empowering better connectionwith, and appreciation by, society and communities. We need tocreate a positive buzz that goes viral—via a revolutionary changein the way things are done, through affirmative actions andexecution."

Survey findings varied among regions. European respondents aremore likely over the next five years to consider regulations theirgreatest concern while ranking talent statistically lower than theother regions. Asia Pacific respondents are almost equallyconcerned about regulatory trends while giving comparatively higherrankings to the need for talent and social media's impact. NorthAmericans are slightly less concerned about regulations than theircounterparts, with higher priorities given to big data and extremeweather events.

"Big data is another area where an insurance company candifferentiate itself," says Steve Shurety, head of the InsuranceManagement Consultancy at Towers Watson.  "There's greatpotential for looking differently at the data we already have,identifying new sources of data, and seeing how we can use eitherto improve the bottom line or to give us a pricing, product orservice advantage with the customer base. With so much focus oncapital management and public policy, are insurers paying toolittle attention to the competitive advantage—or disadvantage—thatwill flow from new megatrends such as big data?"