Insurance sector must reinvent itself with ‘dramatic measures’
By Monira Matin
Insurers are failing to adapt to changing customer needs and technology, instead focusing more on complying with new regulations, a new report by KPMG has found.
The study, called Empowered for the future: Insurance reinvented, questioned more than 70 insurance executives around the world, including industry heavyweights Axa and Aegon, on how they are ‘reinventing’ their business models to keep up with changing demographics and technology.
Nearly half of respondents are from Europe, 19% from Asia Pacific and the remaining from the Americas.
Around a third of those questioned told KPMG that they were watching organisations outside of the insurance sector, paying close attention to disruptive technologies to help them reinvent their businesses.
The study says that insurers need “dramatic measures” to change their business models after 57% of respondents admitted that efforts to transform their organisation were “extracting little value”.
It also found that insurers are increasingly taking new ideas, approaches and even talent from other sectors.
“The travel industry and even parts of the mutual fund industry were already starting to transform 20 years ago.
“What that means is that insurance executives have had the benefit of watching digital transformations unfold for two decades and, as a result, they are probably better prepared than their peers in other sectors were in the past,” said Mark Inkster, chief digital officer of Aegon’s Asian operations.
Inkster admits that increased regulation has created a barrier to digital transformation, often forcing the industry to be “relatively cautious”.
“I think regulation has actually allowed the insurance industry to undertake this transformation a little slower because startups, which are usually key change agents, can find it hard to navigate the regulatory environment.
“Insurance is not an industry that lends itself to the ‘go fast break things’ type of approach that is so prevalent in digital startups,” he said.
The study also found that many insurers were more concerned with implications of regulatory policy than changing customer preferences and needs, with less than a quarter of respondents predicting that their business will be disrupted by changes in customer behaviour.
Mary Trussell, a lead a KPMG global lead partner for insurance innovation and lead author of the report, said customers should be the “inspiration” for insurers to reinvent themselves.
“In a highly regulated sector, treating changes in regulation as a springboard to enhance the business for customers rather than something to be endured distinguishes players at the top of their game.
“The data suggests that many insurers may not yet have their eyes on the ultimate prize,” she said.
As one of the respondents, Peter Roschke, regional chief transformation and customer officer at Axa in Asia, said his organisation is in the process of changing its business model, aiming to become “the most customer-centric insurer in Asia by 2030”.
“The notion of having an ongoing relationship with a customer is now actually quite realistic for insurers. The flow and conversation back and forth between companies and customers is now much easier and that allows insurers to be more proactive, more collaborative, anticipate their customers’ needs,” he said.
For more on the trends within the life insurance sector, click here to read our interview with Bob Pain, chairman of the Association of International Life Offices (Ailo).Category: News