Allianz SWOT & PESTLE Analysis

Strength

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Weakness

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Opportunity

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Threat

1. Risk due to cyber-crimes: The risk of Cyber incidents are causing more damage to companies than ever before and have become expensive for them often resulting in lawsuits and litigation after the event. The awareness about cyber threat has grown rapidly in recent years, because of companies’ ever-growing reliance on their data and IT systems and a number of high-profile incidents. Businesses today are facing a growing number of cyber challenges such as larger and more expensive data breaches, an increase in ransom ware and business email compromise (spoofing) incidents, as well as the prospect of litigation after an event. Even political differences between nation states are being played out in cyber space now which introduces added risk complexity, while even a successful merger or acquisition (M&A) can result in systems problems. Hence this risk has emerged as one of the most important threats in the Allianz Risk Barometer, which is prepared from responses of more than 2,700 risk management experts from around the globe.

2. Cost of fraud insurance claims: There is a huge opportunity to commit fraud as far as the insurance sector is concerned. Insurance frauds can be thought of as an illegal act where the customers may make false claims to rob the company of pay-outs. There can be cases of exaggerated claims, falsified medical history, faked kidnapping and other sorts of ways. These are serious issues which needs to be considered and then on top of it if the company get higher claims simultaneously than they statistically estimated there is again a chance of default on their part which is equally risky to their long-term prospect. Allianz has to take into consideration the different types of risk in the market before designing their insurances as any hole in the policy could seriously cause huge repartitions. In India alone, insurance fraud leads to around Rs 40,000 crore every year and makes up for 8.5 per cent of the revenue that the industry generates. Hence insurance companies are now engaging fraud detection service companies to minimize the threat of fraudulent claims. As a result, the market for global fraud detection and prevention is expected to reach $40,610 million by 2023.

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Political

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Economic

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Social

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Technological

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Legal

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Environmental

1. Impact of uncertain environmental changes: It is very hard to relate environment and its effect with the insurance industry. Apparently, the two seems to be unaffected by each other. But insurance companies are still trying to assess the possible impacts of environmental change on their revenues, and hence profits. Some insurance companies are providing incentives to homeowners to retrofit their houses such that it protects against damages caused by storms. They believe that this would promote greater resilience to environment-related events. Insurance companies may play an equally important role in mitigating risk and promoting adaptation apart from the payment of damages to the customers after the occurrence of disasters. Industry leaders like Allianz say that ultimately the way out is not to insure against risk, but to work with communities and government partners more effectively on risk management, so that hazards are manageable and, therefore, uninsurable.

2. Investments to enable the transition to a low-carbon economy: To address on-going climate change and environmental issues, the company has envisioned the idea of a ‘Low Carbon Economy’. Climate change is a serious issue for the societies that the company operates in. It ends up directly affecting their businesses from the operations to the insurance products. They are currently committed to support the climate change by supporting a transition to the low carbon economy through their investments and investments. They also try to manage the emissions from their operations to lower their carbon footprint. They are committed to making climate protection an integral part of the business, additionally they set long-term climate targets for proprietary investments and business operations that are in line with the goals of the Paris Climate Agreement. They are also committed to the long-term target of reducing the carbon emissions from our proprietary investments to net-zero by 2050.