Global insurers must innovate now…or pay the price.

in Industry Insights, 09.10.2019


KPMG’s Global CEO Outlook 2019 is a report based on a survey of 1,300 CEOs across 11 of the world’s largest economies. Read on as we take a deeper dive into the key trends and hot topics impacting insurance organizations worldwide.

Agility builds resilience

Our report shows that insurance CEOs are confident in business growth over the next few years, yet fully recognize the need for change from within. From culture change and technology transformation, to workforce investment and greater customer focus, they are ready to embrace disruption, forge external partnerships as well as optimize agility and resilience as a means to develop holistic, flexible strategies that will pave the way to new opportunities and help overcome potential threats.

 

Despite a strong awareness of emerging risks, insurance CEOs appeared bullish on their near-term growth trajectory. Compared to moderate confidence in the global economy over the next three years (65%), they are highly confident in the growth of their industry (85%) and that of their own companies (97%). Such confidence in their organization’s resilience can only be attributed to insurers’ recent efforts to ramp up transformation initiatives.

Only the disruptive survive

Amid emerging threats, insurance CEOs are geared up to challenge and disrupt business norms.

A primary focus? Customer centricity.

64% of CEOs believe that they need to significantly improve their understanding of customers and elevate the end-to-end customer experience. By transforming their front, middle and back office functions, they will better understand their customers’ current interaction with the organization as well as their everchanging expectations.

The power of cyber resilience

Improving cyber resilience can no longer be ignored. 74% of CEOs consider information security as both a strategic function and a source of competitive advantage, and 67% believe that cyber security is critical to building trust with key stakeholders. What’s for certain is that a “cyber mindset” from the outset (product development, strategy and vision phases) is fundamental.

Putting innovation into action

Despite this enthusiasm for technology, a mere 14% of CEOs claim to have implemented AI in automating their processes!

Given the complexity of this new technology, and legacy technology challenges that insurers may face, this slow progress perhaps come as no surprise. AI is expected to be equally challenging for companies to incorporate, since it will require them to build out their cultural and physical infrastructures first.

It’s culture shift o’clock

So, what is standing in the way of transformation? Our survey uncovered a sizable “innovation disconnect”. While 85% of CEOs want their employees to pursue innovation without worrying about the negative consequences if an initiative fails, only 59% believe they already have such a culture in place.

For effective attitudinal transformation, innovation must be viewed in terms of a culture and mindset shift, rather than simply the pursuit of cool, high-tech gadgets. New rules of engagement and “borrowing talent” (where employers embrace contingent labor and the gig economy), are just a couple of the ways they can inject innovative thinking into their organizations.

The rise of Workforce 4.0

The idea behind “Workforce 4.0” is to upgrade employee skills. Almost 50% of the CEOs surveyed plan to upskill more than half of their entire workforce, particularly in the digital sphere (data visualization and coding, for instance).

It is crucial that insurers consider a diversified “build, buy, and save” approach to developing their workforce. Furthermore, they must create a value proposition and employee experience that goes above and beyond pay and benefits. That means cultivating an environment and culture where employees can thrive professionally.

The question that should be at the forefront of every insurer’s mind: “What skills and expertise do we need?”

Better, faster, stronger…

KPMG’s Global CEO Outlook 2019 demonstrates that today’s insurers understand that their legacy operating models are no longer fit for purpose.  The majority also agreed that their organizations must become agile to avoid bankruptcy.

The future of insurance lies in achieving a deeper understanding of the customer, operational excellence, intelligent automation and adapting to the industry’s shifting talent needs.

Insurers must increasingly consider what future platforms they build, and develop transformation plans that extend across functions. Their success depends on being more responsive, faster at introducing products, and better at building effective partnerships.

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Any questions about the findings of this year’s KPMG Global CEO Outlook? Get in touch!


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