While insurance executives overwhelmingly know that innovation will drive future competitive advantage and growth, most seem to be struggling to kindle the spark within their organisation, finds a KPMG International report released recently.
Based on a survey of 280 insurance executives from around the world and a series of one-on-one interviews with insurance leaders and new entrants from the world of FinTech, the report, entitled A new world of opportunity: The insurance innovation imperative, finds that the need to innovate is already creating significant pressures for the insurance sector. Most survey respondents see innovation as a significant opportunity, with 83 percent saying that their organisation’s future success is closely tied to its ability to innovate.
“We see that South African insurance customers, shareholders and employees demand innovation. The lines between banking, insurance and asset management have become blurred and insurers now have to compete on a wider stage. Innovation is key to growth, and at times insurers need to reinvent themselves to merely defend their turf,” says Gerdus Dixon, KPMG’s insurance sector leader in South Africa.
According to the report, rapid innovation has created significant challenges for insurers with 48 percent of the respondents to the survey saying that their organisations are already experiencing disruption from new and more nimble competitors. It’s not just up-starts that are creating innovation challenges for the insurance sector. Four-in-ten respondents to the KPMG International survey say that increased competition from their existing competitors would create significant challenges over the next two years.
However, the report also finds that – while insurers clearly recognise the innovation imperative – most are struggling to catalyse innovation within their own organisations. More than three-quarters (79 percent) say that they are already running just to keep up with their day-to-day requirements. Slightly fewer (74 percent) say they lack the internal core skills needed to drive innovation.
“Insurers and intermediaries are increasingly finding that there is no ‘silver bullet’ to creating a more innovative organisation; no ‘off the shelf’ package that drives new ideas,” says Dixon. “We have seen South African insurers respond to the challenge differently with some looking inwards while others have started innovation incubators, enticing external parties to contribute ideas.”
The KPMG International report, which contains insights, articles and quotes from top executives, board members and CEOs at both traditional insurance organisations and new entrants, identifies a number of key focus areas for those insurers seeking to enhance the results from investment in innovation. From cultural transformation through to re-thinking business models, the report leverages the KPMG network’s experience to provide practical advice and valuable viewpoints to help the insurance sector innovate.
With two-thirds of survey respondents saying they already look to other industries for inspiration and innovation models, the KPMG International report also includes leading insights from other fast-moving industries and sectors such as automotive, retail, healthcare, and technology, as well as functional viewpoints on areas such as customer focus, people and change, and models to encourage innovation.
Backed by significant data, valuable industry insights and deep sector experience, A new world of opportunity: The insurance innovation imperative offers pragmatic and actionable advice for those insurers and intermediaries seeking to make the most of the innovation imperative. The full report can be downloaded at www.kpmg.com/insuranceinnovates
KPMG International conducted on online poll in April 2015 with 280 Insurance industry executives across 20 countries. Sector profiles include: 25 percent Life and Health, 23 percent Property and Casualty, 29 percent Composite and 23 percent other. Of the organizations surveyed 32 percent indicated their global revenues exceed $5B USD; 33 percent said they have between $500M and $4.9B in global revenue, and 36 said their global revenue is less than $500M.