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 behaviour.
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.
Accelerating transformation with M&A
Discover global and regional M&A insights, emerging trends and operational strategies to help insurance organisations drive sustainable growth.
Finding ways to thrive in an uncertain world
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:
- Transforming the business model
- Modernising the operating model
- Enhancing customer experience
- Accelerating innovation
Transforming the business model
Organisations within the insurance industry will continue to rationalise their portfolio of businesses and capabilities as they pivot away from the multi-line strategies predominant in the past. As a part of this, they will redefine what their core business looks like for the future; identify and evaluate adjacent markets, new value propositions, and customer segments; reassess their existing products, brands, and value propositions beyond loss protection; and identify and implement innovative revenue models. Both M&A and partnerships and alliances will catalyse and enable this transformation.
Modernising the operating model
The quest for more speed, less cost, and better efficacy through the use of automation and emerging technologies will drive further realignment of core capabilities, competencies, and operating costs. The operating model simplification, digitisation, and optimisation objectives of several larger insurers could lead to further outsourcing of components of the insurance value chain to cost-efficient managed services and business process solution providers within the insurance ecosystem—primarily through strategic alliances and partnerships.
Enhancing customer experience and stakeholder engagement
Successful insurance organisations will likely be those that have the most meaningful engagement with their customers, employees, brokers, vendors, and other stakeholders. These players will empathise with their stakeholders and have access to robust insights into their needs, wants, motivations, and challenges—which can be used inform interactions and to design relevant products and services. Acquisitions, partnerships, and alliances that enable access to innovative technologies and capabilities will be critical for enhancing the customer experience and driving meaningful stakeholder engagement.
Accelerating innovation
Strategic partnerships within the insurance ecosystem will become a mainstay as businesses strive to gain access to emerging technologies, innovative capabilities, and new sources of differentiation at scale. Companies may struggle to compete and maintain market position through this period of transformation, and collaboration as a differentiation strategy will be become a source of competitive advantage.
Successful insurance organisations in the future will likely be those that transform their operating capabilities to include:
59 percent of insurance CEOs believe appetite for M&A is high and that their organisations are likely to undertake acquisitions that will significantly impact their business.1
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 recognize 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.
How KPMG can help
KPMG’s team of experienced professionals support insurance organisations through their journey. With leading industry perspectives, deep M&A and Strategy knowledge, proprietary solutions, and advanced data and analytics, our team of experienced specialists serve our clients with a fully integrated, multi-disciplinary approach, orchestrating deal activities across multiple functions and throughout the transaction process to generate unique insights into companies and markets. Please contact us to discuss your unique M&A requirements.
Our accounting and finance insights
Something went wrong
Oops!! Something went wrong, please try again
Our people
