Partnering for growth in the insurance sector – KPMG

Article Synopsis :

Entering an era of unprecedented change in the insurance sector, the vast majority of insurance executives intuitively know they need to be more innovative. At the same time, they recognize their current organizational structure and culture may not be conducive to the type innovation required to compete in a digital world.

If you can’t beat them, partner with them.  Amazing things can happen

In “The power of alliances: Partnering for growth in the insurance sector”, KPMG shares insights from past and present partnerships in insurance, focusing on three main areas where insurers have been particularly active: bancassurance, financial technology (FinTech), and digital (non-traditional) distribution channels. Toward creating sustainable and value-driven partnerships and alliances, five key takeaways from the report are:

1. Think about the customer: The success of a distribution channel largely depends on consumer preferences and demands, trends that insurers must understand before investing.
2. Be open to non-traditional ideas: Selling insurance in supermarkets, over mobile phones and in vending machines may be somewhat unorthodox but could unlock new markets entirely.
3. Consider the additional value: The use of digital distribution channels opens the door to additional revenue or value generation opportunities for insurers and their customers.
4. Explore affinity deals: Affinity partnerships provide insurers with an established client base to market to.
5. Don’t forget the basics: Whether for a distribution channel or new technology, creating the right structure, operating model and success factors is critical.

An alliances-based mindset sees new and endless combinations of tie-ups leading to profitable growth. To guide thinking, KPMG suggests deals centred around:

• The acquisition of companies bringing complementary capabilities from outside the insurance sector (e.g. accessing customer segments in a user-friendly, customer-driven format)
• Partnerships supporting and developing innovation (e.g. incubators and innovation hubs)
• Partnerships creating infrastructure to reduce the protection gap
• Joint ventures and alliances bringing together complementary skill sets (e.g. behavioural analytics capabilities to support sales and product development)

This report follows on from KPMG’s recent industry publication, A New World of Opportunity: The Insurance Innovation Imperative, which explores other key challenges and considerations facing insurers as they strive to become more innovative. Combined, these reports create a compelling perspective highly relevant to innovation-minded insurance executives worldwide.

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