Insurance industry challenged by digital future according to KPMG
Based on interviews with insurance leaders globally, ’Transforming Insurance’ highlights the sector’s priorities and progress, in particular firms’ digital maturity, to meet the digital challenge, including insights into gains in adapting to customers’ mounting digital preferences.
‘Transforming Insurance,’ KPMG International’s latest industry report, delivers a vivid picture of the global insurance landscape, as market players respond to the changes that are transforming all aspects of their business. Based on interviews with insurance leaders globally, the report highlights the sector’s priorities and progress, in particular firms’ digital maturity, to meet the digital challenge, including insights into gains in adapting to customers’ mounting digital preferences.
“Our research shows that the industry recognizes the imperative of reinventing operating models to respond to and capitalize on digital technologies,” said Gary Reader, Global Head of Insurance and Partner, KPMG in the UK, “but it also shows that insurers are struggling to develop digital strategies that align with their business objectives and to resolve legacy infrastructure and business processes. Digital advances, the rise of social networks and the ‘internet of things’ are having a transformational impact on the volume, variety and velocity of data coming at organizations, adding further complexity.”
Mary Trussell, report author, and Global Insurance Innovation and High Growth Markets Lead, KPMG in the UK says: “The insurance industry is at an inflection point. To date, insurers have largely embraced digital capability as a supplement to existing customer service channels. Our survey shows a massive 108 percent increase in the number of respondents who want to use digital technology to enter new markets in the next three years as compared with the previous three years. That reflects growing digital ambition but significantly raises the stakes. Yet around the world we still see many insurers and intermediaries focused on product and channel silos, facing significant challenges from legacy systems rather than unlocking value for customers and investors. This suggests the need for more than digital transformation. Such a transformation represents a massive cultural change.”Research depicts strategic imperatives and hurdles:
Respondents understand that emerging technologies can enable them to reinvent dated operating models and product delivery channels or perform sweeping re-engineering of end-to-end management. Yet there are some significant challenges to achieving this:
- Our survey shows a 108 percent increase in the number of respondents who want to use digital technology to enter new markets in the next three years as compared with the previous three years, and a significant 43 percent increase in those who plan to use digital means to deliver new products and services.
- This is unfolding against a backdrop where 65% of respondents feel the regulatory environment does not yet support product and channel innovation.
- These changes will also change the operating model – 69 percent more respondents plan to use digital to optimize their supply chain as have done so in the past.
- While more than two-thirds of respondents in the report say their digital strategy goes beyond their website, only just over one-third say their digital initiatives are aligned with their company’s strategic objectives.
- 31% of respondents said the leading challenge with data analytics is capturing reliable data and 35% cited legacy systems as the underpinning issue.
- Over half of respondents identified human barriers to implementing a data and analytics strategy rather than technical constraints.
The path to enabling digital innovation
Transforming Insurance identifies some new paths to overcome challenges. Among the tactical recommendations for success, the report advises insurers and intermediaries that:
- Digital is about people: digital experiences do not have ‘users’ – they live with people in a more intimate and direct relationship than software from an earlier generation.
- Don’t be afraid to fail: but learn to fail swiftly and safely by building a ‘test, learn and experiment’ culture.
- Agility is king: quickly obtain consumer feedback in order to refine products, service or back office solutions.
- Embrace risk: learn to take on measured, acceptable levels of risk in order to innovate.
- Keep a sharp eye on emerging trends: watch not only competitors but other sectors to identify threats and opportunities and develop creative, tailored responses.
“In Transforming Insurance, we hone the discussion on ways technology can help insurers and intermediaries meet the challenges and transform their capacity to see trends, rapidly respond, adapt and thrive,” observes Gary.
“Some of these tactics will undoubtedly feel unnatural for insurers and intermediaries who are grounded in avoiding risk. But they are built on insights from seasoned commentators around the world. The message is resoundingly that, for competitive advantage, insurers must fundamentally change their organization by attracting and rewarding talent and building a truly agile, collaborative culture, leveraging technology from strategy to core processes to build sustainable competitive advantage” explains Mary.
About Transforming Insurance
Transforming Insurance is the third in a series of publications developed by KPMG’s global insurance practice designed to inspire, guide and empower organizations for the future, equipping them to outperform through technology-enabled, business-led innovation. The report illustrates shared issues across the global insurance, reinsurance, life, health and consumer markets and provides exclusive global client research findings, perspectives of opinion formers from around the world, and leading practices and concepts mapped against the insurance business model.
This news content was configured by WebWire editorial staff. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.