Insurance transformation: The new agenda

The insurance sector is undergoing a profound transformation. As market dynamics shift and new challenges emerge, insurance leaders are under increasing pressure to enhance agility, improve operational efficiency, and deliver sustainable cost reductions.

Yet, despite significant investment and effort, only a minority of insurers have achieved their transformation and cost objectives. What sets these leaders apart, and how can others replicate their success?

Drawing on a global survey of over 250 insurance executives and in-depth interviews with industry leaders, “Insurance transformation: The new agenda” explores the strategies, opportunities, and complexities shaping the future of insurance. This report contains insights from KPMG’s global insurance professionals, provides actionable guidance for CEOs, CFOs, COOs, and transformation leaders seeking to drive meaningful change.

Insurance transformation: The new agenda

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Niall Naughton

Partner, Head of Insurance

KPMG in Ireland

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The urgency of transformation

Recent years have seen insurers enjoy strong margins and profitability, but the landscape is changing rapidly. Economic uncertainty, evolving customer expectations, and the rise of new technologies are forcing insurers to rethink their operating models.

According to the KPMG 2024 Insurance CEO Outlook, 73% of insurance CEOs are confident about growth, yet only 25% of transformation and cost initiatives are considered highly successful. The gap between ambition and achievement is clear.

What sets leaders apart?

The most successful insurers share several key characteristics:

Clear cost objectives

They define what success looks like and align transformation goals with business strategy.
Robust investment

Over half of highly successful insurers invest at least 30% of their OpEx budget in transformation.
Leadership accountability

Transformation is driven from the top, with leaders accountable for outcomes.
Centralised or hub-and-spoke models

These approaches ensure alignment and coordination across the organisation.
Emphasis on data, AI, and automation

Leaders are embedding AI into new ways of working, improving data and analytics, and automating key processes to drive efficiency and enhance customer experience.

Overcoming barriers

Transformation is not without its challenges. Many insurers struggle with the complexity of change, lack of alignment between cost and transformation objectives, and insufficient ownership for delivery.

Smaller firms, in particular, report lower levels of success. The report highlights the importance of thoughtful planning, robust governance, and a relentless focus on root causes of inefficiency to ensure sustainable outcomes.

Case studies: Empire Life and Covéa Insurance

Empire Life’s transformation journey underscores the value of intentional strategic investment and strong executive support. By empowering business units and aligning spend with strategic objectives, Empire Life has fostered a culture of continuous change and improvement.

Covéa Insurance, meanwhile, achieved a dramatic turnaround by focusing on underwriting quality and operational efficiency. The leadership team’s commitment to accountability, innovation, and cultural change was instrumental in delivering record-breaking profits and sustainable growth.

Five key takeaways for insurers

Set a clear vision for change

Align cost and transformation goals with business strategy.
Make leadership accountable

Ensure leaders are aligned and transformation efforts are visible across the organisation.
Leverage data

Invest in data management to drive insights and informed decision-making.
Prioritise process before technology

Evaluate and redesign core processes before implementing new solutions.
Align culture with objectives

Foster a culture that embraces change, continuous improvement, and accountability.

How KPMG can help

KPMG’s global network of insurance professionals brings deep industry knowledge, actionable insights, and implementation expertise to help clients realise the full potential of their people and technology.

Whether you are seeking to optimise functions, manage risk, or drive enterprise-wide transformation, KPMG can support your journey to operational and cost excellence.

If you have any queries about insurance transformation, operational efficiency, or how KPMG can support your organisation’s journey, please don’t hesitate to contact our team below. We’d be delighted to hear from you.