Topics: Euro, United Kingdom, European Union Pages: 3 (791 words) Published: January 31, 2013
The Financial Environment- Group Presentation
Economical Aspects:
* ‘The European Crisis’ influence on demand.’ – Unfortunately the Euro could still collapse despite the bails out that have been taking place recently. Whilst the insurance industry appears to be well prepared if this does happen, the potential further consequences of a deeper recession across Europe would more than likely be harmful. It would reduce the demand for insurance products due to the reduction in disposable income and therefore flatten the recent steady growth of the European insurance industry, which has seen a ‘strengthening of the industry’s capitalisation, solvency and profitability’. * ‘The impact on European organisations and individuals confidence.’ – Confidence is currently low as Europe hangs on the edge of further and deeper recessions in this unpredictable and unstable economy. This is likely to mean insurance organisations are less likely to invest in expansions and improvements in services and products, meaning other foreign insurance providers in more successful economies have the opportunity to increase their competitiveness and they continue to improve. For example Aviva have recently seen a decline of 38% in share prices and a decline of pension sales across the EU due to the unstable nature of the economy and are currently undergoing UK and EU strategic reviews. Therefore we could see reduced profits and the possibility of further unemployment and downsizing, not helped by the global stock market decline. * ‘High unemployment associated with crime.’ – UK and European high employment following the recession has many associated consequences. The main association is increased crime as businesses and individuals feel the squeeze on profits and disposable income. This will result in more pay outs on insurance claims as crime increases and therefore a greater risk in providing cover, meaning higher premiums and the issue of affording insurance services worsening....
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