Post-financial crisis regulatory reforms, distribution challenges and diminishing investment returns are transforming the insurance industry, according to a survey for US business consultant State Street.

“No single route to the future will be right for every company,” State Street says. “However, it is clear the industry has reached a period of far-reaching structural change.”

The Economist Intelligence Unit surveyed 307 executives worldwide for the survey. About 53% of respondents were from life insurers, 19% were from property and casualty groups, 12% were from diversified insurers and the rest were reinsurers and health insurers.

“Fully 29% of survey respondents globally report that their companies have sold lines of business as a direct result of new capital requirements or risk management considerations, and this figure rises to 39% in Europe,” State Street says.

About 28% say enhancing product offerings is their strategic priority, followed by distribution (24%), managing capital to improve investment returns (23%) and entering new geographic markets (14%).

Low interest rates mean more companies are considering alternative assets, but 79% of executives say investing in more complex classes is a challenge for their companies.

Other challenges include improving distribution to cater for the growth in online and phone-based models, updating technology and data systems and developing innovative products.

“Life insurers especially need to adjust offerings to find profitable ones that attract the growing market of older consumers,” State Street says.

Emerging markets are attractive but “buying your way in” is increasingly expensive.

Despite the challenges, the report finds an underlying optimism.

Industry profitability is likely to increase over the next five years, according to 42% of respondents. Just 19% expect a decline.

“Even the growing regulatory burden may have a bright side, by forcing companies to make long-avoided IT investments,” the report says.