The global commercial insurance industry is performing well but faces a number of pressures that threaten its long-term sustainability, in an environment that will necessitate a new approach to doing business, according to a new report.
The industry is predicted to continue its growth trajectory over the next decade. Despite this positive outlook, fears are growing of a number of external challenges to the industry’s success, according to KPMG’s Future of Large Commercial Insurance report.
Compiled following interviews and research with more than 400 industry leaders worldwide, KPMG’s report cites changing client and broker expectations; economic uncertainty; regulatory and legal deglobalisation; technology evolution and ESG activism as the top five concerns for the sector.
Laura Hay(pictured), global head of insurance at KPMG, said: “Despite strong market performance, traditional commercial insurance business models are coming under pressure from swirling changes that now have the sector on the cusp of a radical transformation. To survive and thrive in this new environment, commercial insurers shouldn’t stand still. They need to evolve and build new differentiated capabilities that connect across the organisation. Technology will be critical, but digital transformation goes well beyond technology. Insurers need a clear, client-led business design of their end-to-end process that should be driven by deep client, broker and market insights. It should be underpinned by a digitally-enabled technology architecture and empowered workforce. In our view, it is only by taking this “connected” approach that insurers can achieve true value from their digital transformations.”
KPMG’s report identifies three new business models for the businesses that emerge as ‘winners’ in the long-term. They are:
Agile global player – optimising the existing
Innovative specialist – adapting and exploiting at pace
Open-source risk manager – stock market of risk
Mark Longworth, global head of insurance advisory at KPMG, added: “To help ensure these winning business models will be successful, commercial insurers should focus on building new and differentiated capabilities that connect across their organisations. While leaders can’t do everything, they should identify which capabilities and models will help make the biggest difference to their business.
“Technology will be critical. But digital transformation goes well beyond technology. A clear, client-led business design of end-to-end processes is essential. It should be driven by deep client, broker and market insights. And it should be underpinned by a digitally-enabled technology architecture and empowered workforce. In our view, it is only by taking this connected approach that insurers can achieve true value from their digital transformations.”