Accelerating transformation with M&A

The global insurance industry has been navigating an era of transformation. Through recent years, insurance leaders have been working through – cautiously yet optimistically – the realities associated with geopolitical and economic uncertainties, shifting demographics, evolving risks, and adapting to consumer behaviors.

These factors have combined to drive insurers and other industry players to rethink their M&A and growth strategies, and reshape their business models – including partnerships, and alliance strategies – so that they can grow and thrive in a future expected to look fundamentally different from the past. Many of these challenges, however, are also creating new opportunities—ones that industry leaders are exploring and embracing within their business and operational strategies to help drive sustainable, profitable growth.

In this latest report, discover key insights across both global and regional M&A activities, deals and trends. We highlight influences impacting the insurance industry and share future business models that insurance organisations should consider as they review and develop their M&A and growth strategies, to align with the increasing pace of transformation and evolving customer needs.

Over the next few years, transformation across the industry will continue to accelerate. Industry players will need to become more agile and more relevant in the eyes of their customers — and to differentiate themselves from their competition. As insurance leaders look to find ways to thrive in an uncertain world, the strategic initiatives they will likely focus on can be broadly categorised into four interdependent themes:

• Better understanding of their customers—acquire robust knowledge and understanding of the needs, wants, motivations, and challenges of their customers, and leverage these insights to inform customer interactions and to design products and services for tomorrow’s customers.
  
  
• Relevant value propositions, products, and services—create value propositions that reflect customer motivations and address customer challenges; provide products and services that meet the needs and wants of customers; and identify the right set of experiences, features, and value-added insights to enhance customer engagement.
  
  
• Loosely coupled, but tightly connected operating platforms—leverage a connected operating model that enhances platform connectivity by integrating new capabilities into existing technologies, while continuing to modernise the core operating platform; and enable efficient, data-driven operating models that enhance decision making and improve interactions with customers, employees, partners, and stakeholders.
  
  
• Capital optimisation—harness insights across their businesses, insurance ecosystem, and broader competitive landscape to inform their capital allocation and deployment strategies; and constantly rationalise their portfolio of existing businesses and operating capabilities via divestitures, mergers and acquisitions, and partnerships and alliances.

While many potential buyers are adopting a wait and watch approach, the pressure to retain momentum within an industry navigating transformation will likely see M&A activity increase. Insurance leaders will be looking to transform their business models and embrace emerging technology to improve operational efficiencies and create stakeholder value. These leaders will also be looking for ways to better engage with customers to enhance their experience, while also providing more targeted and relevant products and services that address the diverse needs of different demographics in the geographies in which they operate.

Over the next few years, the transformation of the insurance industry is likely going to accelerate as insurance companies strive for sustainable profitable growth. Leading industry players recognise the role that M&A will play, as they develop new ways to become more agile and more relevant in the eyes of their customers—and to differentiate themselves from their competition.