Overwhelmed by constant disruption and facing what must seem like an interminable low-interest rate environment, insurance executives are worried. Everyone wants to know how to grow ahead of the market. Yet most are struggling to put together the ‘winning formula’ that will ensure profitable and sustainable long-term growth.
We believe that we have a viable solution and we plan to use this article series to articulate it. Get ready for a journey towards transformation.
At KPMG, we spend a lot of time talking with insurance executives. And – in almost every case – our conversations turn to the topic of growth. Insurance executives recognize that the low-interest rate environment is not going away any time soon. And they feel the pace of competition heating up. The big question on everyone’s mind is how to achieve profitable growth in today’s insurance market.
To help answer this question, KPMG surveyed more than 100 Insurance CEOs at the start of 2016. We asked them about their growth expectations, their challenges, their investments and their capabilities. We talked about key topics such as technology, regulation and competition. And we learned about their strategies related to innovation, customer retention and transformation.
What we found was a significant lack of confidence amongst insurance CEOs, not just in their growth expectations over the next year (just 33 percent say they are very confident in their company’s growth prospects) but also in their ability to transform (71 percent worry that their organization will still largely be the same in 3 years’ time).
Insurance CEOs told us that they are struggling with innovation and with creating the right environment to drive customer-centricity. Seventy-nine percent said they were concerned about the relevance of their products and services three years from now. And almost eight-in-ten admitted that they are very concerned about their ability to keep up with new technologies and advancements.
Clearly, doing nothing at all is not a strategy for long-term success. Indeed, in today’s fast-paced and highly-competitive marketplace, change is not just about winning new customers; It’s about survival.
Unfortunately, there is no universal roadmap to success – no ‘off-the-shelf’ solutions or proven methodologies. Rather, our experience suggests that each organization will need to focus on balancing the right mixture of actions, strategies and investments to create a unique ‘winning formula’ for their particular organization.
It will not be easy. To start, insurance organizations will need to improve their understanding of their current and target customers. This will require enhanced data management and improved analytics. And it will demand a keen sense of current market trends, customer preferences and demographic shifts.
Once insurers understand what their customers want, they can start to create a transformation strategy. A focus on innovation will be key in delivering on customer expectations. So, too, will be the ability to create partnerships with both traditional and non-traditional players in the ecosystem.
Of course, growth must be sustainable. So insurers will also need to explore new opportunities to achieve scale and improve efficiency. Some will look for potential mergers and acquisitions that unlock new market segments, capabilities and geographies. Others will find opportunities in new technologies – automation, digital labor and cognitive computing solutions – that improve both business flexibility and profit margins.
At KPMG, we understand the complexity and the opportunities facing today’s insurance organizations. And we believe we know how to create a ‘winning formula’ that drives sustainable and profitable growth. This article series shares our point of view based on the survey data, and our experience working with CEO's at insurance and reinsurance companies around the world.
Over the coming months, we will explore the big issues and tackle the big questions facing insurance executives as they strive for growth. We will talk about transformation, innovation and customer centricity. We will dive into data and analytics, automation and cyber security. And we will explore the opportunities emerging for partnerships, mergers and acquisitions.
Throughout the series, we will hear from leaders across the KPMG global network who will share their experience working with some of the world’s leading insurance organizations to create and drive growth strategies. Leveraging data from the CEO survey, both from insurers and CEO’s outside the industry, we will focus on providing ideas and actions that are innovative yet practical and bold yet prudent.
Nobody will deny that insurance executives are under massive pressure to perform. Yet our experience suggests that it will be those that take a methodical and long-term approach to transformation that will ultimately set the pace and outperform the market. While those who execute sporadic tactical measures simply to meet short-term shareholder expectations and margin targets will be at risk of being left behind.
We hope that this article series will set out a number of the key ingredients needed to help insurance executives create their own winning formula for long-term and sustainable growth.
On behalf of KPMG’s global network of insurance professionals, and contributors to this series, I encourage you to engage in the conversation both inside and outside of your organization and to contact your local KPMG office to start creating your winning formula.
This article series provides insights into the exceptions of insurance CEO’s for business growth and the challenges they face.