The FINANCIAL -- 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 organization, finds a KPMG International report released on September 17.
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 organization’s future success is closely tied to its ability to innovate.
“Based on experience from KPMG professionals globally, the reality is that insurance customers, shareholders and employees demand innovation,” noted Mary Trussell, KPMG International’s Insurance Innovation and High Growth Markets Global Lead, and author of the report. “Indeed, they expect it, not only from technology providers and device manufacturers, but also from their insurance providers. Insurance organizations can no longer do ‘more of the same’ and expect to grow.”
According to the report, rapid innovation has created significant challenges for insurers with 48 percent saying that their organizations are already experiencing disruption from new, more nimble competitors. Interestingly, respondents from North America were significantly more likely to say they had experienced disruption than their European peers and somewhat more likely to do so than their Asian peers.
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 2 years.
However, the report also finds that – while insurers clearly recognize the innovation imperative – most are struggling to catalyze innovation within their own organizations. 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 create a more innovative organization; no ‘off the shelf’ package that drives new ideas,” noted Gary Reader, Head of Global Insurance, KPMG International. “Instead, organizations will need to navigate their own path through this new world of opportunity, developing new business and operating models and new partnerships in order to out-compete and out- innovate their peers and bold new entrants.”
The KPMG International report, which contains insights, articles and quotes from top executives, board members and CEOs at both traditional insurance organizations and new entrants1, 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.
“Striking your own path for innovation does not mean starting from scratch,” added Mary Trussell. “Instead, it is about leveraging experiences and successes including the ideas of others to create new propositions and approaches to delight customers and create value. It’s about learning from both traditional competitors and new disruptors. And it’s about shamelessly borrowing best practices and new ideas from outside the insurance sector and its traditional allies.”
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 kpmg.com/insuranceinnovates.