An overwhelming majority of insurance executives, 83%, say their organization's future success is closely tied to their ability to innovate, according to “A new world of opportunity: The insurance innovation imperative,” a report and survey from KPMG International. However, nearly as many say they are already running to keep up with their day-to-day requirements and lack the skills necessary to drive innovation.
Rapid innovation has created significant challenges for insurers, according to the report, as 48% said they already are experiencing disruption from new, more nimble competitors, and 40% said that over the next two years they would face increasing competition from existing competitors, which would create significant challenges. Nearly 66% said they already are looking to other industries, such as automotive, retail, healthcare and technology, for inspiration and innovation models, and to models for customer focus, people and change to encourage innovation, KPMG said.
"Based on experience from KPMG professionals globally, the reality is that insurance customers, shareholders and employees demand innovation," said 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."
While insurers recognize the need to innovate, most are struggling with innovation; 79% said they are “already running” to keep up with their day-to-day requirements; 74% said they lack the skills necessary 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," said 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."
KPMG International polled 280 Insurance industry executives across 20 countries in April; responders included 25% life and health; 23% P&C; 29% composite and 23% other. Global revenues exceed $5B USD for 32%; were between $500M and $4.9B for 33%; and 36% said their global revenue is less than $500M.
"Striking your own path for innovation does not mean starting from scratch," Trussell said. "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."
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.
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