The insurance innovation imperative – KPMG Report
Article Synopsis :
In “A New World of Opportunity: The insurance innovation imperative”, KPMG explores survey data from senior respondents in insurance markets around the world, augmented with insights from interviews with some of the world’s most forward-thinking insurers, reinsurers, intermediaries, startups and disruptors.
The key theme of the report is that too many insurers seem focused on operational innovation versus strategic growth-oriented innovation. Other findings include:
- Many organizations believe improved use of technology will help drive innovation and growth. More than half of survey respondents say digital technology (and its integration into business objectives) is one of the three greatest opportunities for growth in their sector; a quarter of respondents cite digital technology as the single biggest opportunity for growth over the next two years.
- A number of insurers and intermediaries recognize the need to evolve more radically to defend against new competitors and continue to grow their business. 26% of respondents say their primary growth strategy revolves around the development of new products and services.
- Mid-sized respondents are significantly more focused on developing new products than both their smaller and larger rivals. Given that these organizations enjoy the scale to invest in new developments while remaining more nimble, this suggests mid-sized firms may have an edge against larger (and smaller) competitors.
- Less than half of all respondents (47%) have an existing enterprise-wide innovation strategy and only 39% have a budget for innovation. Interestingly, 80% of respondents see innovation as a top (i.e., board-level) concern.
- Lack of investment and rising cost pressures are cited as key barriers to innovation.
KPMG sees the insurance industry at an inflection point. The report issues ten recommendations for insurance leaders keen to respond to the innovation imperative:
- Apply agile and dedicated leadership
- Encourage change through cultural transformation
- Cultivate high-performing human talent
- Understand why you are investing
- Decide how your organization will thrive as the insurance industry transforms
- Learn from others
- Develop your own view of when and how advances in technology will impact your organization
- Leverage new technologies into your current business
- Mitigate risk by investing and experimenting
- Be willing to disrupt existing business models
At 40 pages this report is comprehensive and chock full of useful data and insights to help c-level executives drive innovation in and across their organizations. A brief survey of innovation in other industries is also included.
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Digital Insurer's CommentsInsurers understand the direct link between innovation and growth. It’s also true most organizations believe improved use of technology will be the key driver of innovation. It’s innovating – especially in digital technologies – that seems to be the hard part.
If you haven’t already done so, now is the time for a comprehensive analysis of competition and markets, clients and products, governance, risk and compliance, and organizational effectiveness viewed through the narrow lens of technology.
Do you have a digital strategy? Has it been socialized beyond your marketing and IT departments? Are you using it as a basis to fund aspirational projects?
If not, what is your Plan B for making innovation happen?
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