Expect Investment in New Technologies, Cyber Security Solutions, Hiring New Talent and Forming New Partnerships & Alliances
CEOs of U.S. insurance companies say that driving successful innovation will be critical to their continued success in the next 3 years, according to the 2016 KPMG CEO Outlook survey. In fact, 75 percent believe the next 3 years will be more critical to their business than the previous 50 years. In the poll of 41 U.S. insurance CEOs, 90 percent indicated that innovation is on their personal agenda, while 66 percent believe that it is very important to foster a culture of innovation.
“The changes in the insurance industry are calling for the development and implementation of new strategies and business models,” said Laura Hay, National Insurance Leader, KPMG. “Insurance CEOs believe that disruptive technologies can be leveraged effectively to improve products, client interactions and customer loyalty, while increasing sales and decreasing costs. Companies need to identify and take advantage of new technologies, including artificial intelligence, to enhance their competitive edge and grow.”
For more information on the KPMG CEO Outlook 2016 report, please visit https://home.kpmg.com/us/en/home/insights/2016/06/us-ceo-outlook-2016-its-now-or-never.html. For a breakdown of the results from the responses of insurance CEOs, please visit: https://assets.kpmg.com/content/dam/kpmg/us/pdf/2016/11/embrace-change-in-changing-times-insurance-ceo-outlook.pdf.
Insurance CEOs polled by KPMG expressed optimism about their companies’ and the industry’s growth prospects over the next 3 years. However, CEOs indicate that growth will be accompanied by increasing risks, with cybersecurity being their biggest concern followed by regulatory and geopolitical risk.
Cybersecurity – Devoting Resources in Next 3 Years; a Business Opportunity for Insurers
Cybersecurity is at the top of the list of the areas insurance CEOs plan to devote significant investment/resources to in the next 3 years. Only 27 percent of insurance CEOs say they are fully prepared for a cyber event, while 66 percent say they are somewhat prepared.
“In this highly connected world, enhancing cybersecurity tools and practices has become essential for insurance companies,” said Matt McCorry, Insurance Advisory Leader, KPMG. “To effectively address this challenge, insurance CEOs need to make cybersecurity a strategic priority and invest time, resources and talent to proactively prevent breaches. Cyber attacks could have severe ramifications on their companies’ business and their customers.”
Cybersecurity, on the other hand, is creating a business opportunity for insurers as they are looking to launch new products to protect businesses from cyber events, according to another KPMG report: Cyber insurance: Growth, risk and uncertainty reign.
“Although cyber insurance may present a new market opportunity, insurers grapple with questions about how to gather lost data, calculate cyber exposure, structure coverage and price products,” added McCorry.
Insurance M&A activity and Hiring of New Talent
To accelerate the execution of their strategies, insurance CEOs also indicated they are hiring new talent and that acquisitions, joint ventures and partnerships are among their top strategic priorities.
In fact, nearly 30 percent of insurance CEOs expect to be involved in some form of merger while 37 percent are considering acquisitions over the next 3 years. These transactions ensure the rapid acquisition of new skills for the improvement in the competitive position of each insurance company.
“Acquisitions, partnerships or divestitures are effective ways for many companies to quickly acquire new technologies and capabilities necessary to thrive in this unprecedented transformation of the insurance industry,” added Hay.
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative (“KPMG International”). KPMG International’s member firms have 174,000 professionals, including more than 9,000 partners, in 155 countries.