Insurance transformation: The new agenda

Anticipated cost savings are significant for insurance organisations.

Yet successful transformation has been a challenge.

Not all insurance organisations think they’re ready.

On the surface, the insurance industry appears vibrant with organisations adopting new technologies and launching performance-enhancing programs. But beneath this momentum lies a critical question: What sets the true leaders apart? How are high-performing insurance organisations achieving operational efficiency, cutting costs, and building sustainable performance in a rapidly evolving landscape?

Perhaps not surprisingly, the largest proportion of transformation budgets are earmarked for technology. Nearly eight in ten insurers report that they have either implemented or are about to implement new digital procurement platforms to improve their supply chain management. And respondents say technology is where they plan to focus around a quarter of their OpEx spend. The remainder would be split equally between process re-engineering (20%) portfolio and infrastructure rationalisation (19%), skills and capabilities (19%) and regulatory spend (18%).

Data from this recent survey suggests that — for many insurance organisations — the approach to transformation is leading to siloed initiatives and outcomes. Less than four in ten respondents say that their transformation and cost efforts are being executed through a centralised model where initiatives are assessed, planned and prioritised at the enterprise level. And one in five say they employ a ‘hub-and-spoke’ approach where strategies are prioritised centrally but executed at a geographic or functional level. This fragmented approach can lead to inefficiencies, duplicated efforts, and missed opportunities, ultimately limiting the full potential of transformation programs.

So, what are the most successful insurance organisations doing differently to achieve transformative outcomes?

Our research points to four key differentiators:

1. Clearly defined cost objectives
   Insurers demonstrating successful transformation initiatives set specific, measurable cost goals that align with their broader business strategy.
2. Robust, dedicated budgets
   Business leaders allocate sufficient resources to ensure transformation initiatives are well-funded and sustainable.
3. Alignment between cost and transformation goals
   These organisations ensure that cost-saving efforts support—not hinder—their innovation and modernisation agendas.
4. Leadership accountability
   Executive teams are directly responsible for delivering results, fostering a culture of ownership and performance.

Transforming the insurance organisation and cost base is not easy. In fact, very few industry leaders say their past efforts have fully achieved their transformation and cost goals. The majority of our respondents say that they struggle with the complexity of it all — they face significant change portfolios but lack focus on prioritisation and coordination. So here are five key takeaways to help insurance organisations achieve measurable and sustainable transformation outcomes.

1. Set a clear vision for change
   Define a clear vision that aligns your cost and transformation goals with your overall business strategy.
2. Make leadership accountable and achieve visibility
   Leadership should be onboard, aligned and accountable for transformation goals.
3. Improve and leverage your data to achieve your goals
   Unstructured or poor-quality data often prevents insurance organisations from identifying inefficiencies and making informed decisions.
4. Consider your key processes before jumping into technology solutions
   Don’t rush to implement technology without first evaluating your core processes — in some cases, outsourcing or manage services may offer greater efficiency.
5. Align your culture to your transformation objectives
   Without the right cultural foundation, even the most well-designed strategies and technologies can fail to deliver their intended impact.

At KPMG, we believe transformation starts with people. Our global network of experienced insurance professionals provides clients with deep industry knowledge, actionable insights and implementation expertise, helping to realise the full potential of their people and technology, and working together to achieve successful transformation. Because when people and technology are in harmony great things happen.