Insurance sector knows innovation important to being competitive, but struggling to innovate: KPMG

Surveyed insurance executives understand the importance of innovation to drive future competitive advantage and growth, but most are struggling with making that goal a reality, reports KPMG International.

A new report released Thursday, A new world of opportunity: The insurance innovation imperative, is based on input from 280 property and casualty, life and health, composite and other insurance executives from 20 countries, as well as a series of one-on-one interviews with insurance leaders and new entrants.

Respondents say they see innovation as a significant opportunity, with 83% reporting the future success of their respective organizations is closely tied to its ability to innovate. In fact, 48% of insurer say their organizations are already experiencing disruption from new, more nimble competitors.

“Interestingly, respondents from North America were significantly more likely to say they had experienced disruption than their European peers and somewhat more likely to do so than their Asian peers,” KPMG International reports.

But beyond pressure from new players is pressure from old ones. Four in 10 survey respondents say increased competition from their existing competitors would create significant challenges over the next two years, notes the statement from KPMG International.

“Based on experience from KPMG professionals globally, the reality is that insurance customers, shareholders and employees demand innovation,” Mary Trussell, report author and global lead for insurance innovation and high growth markets at KPMG International, says in the statement. “Insurance organizations can no longer do ‘more of the same’ and expect to grow,” Trussell advises.

Despite the recognition of the innovation imperative, 79% of surveyed insurers say they are already running just to keep up with their day-to-day requirements. Add to that that 74% of respondents report they lack the internal core skills needed to drive innovation. 

That may be why two-thirds of surveyed insurers note they already look to other industries for inspiration and innovation models.

“Insurers and intermediaries are increasingly finding that there is no ‘silver bullet’ to create a more innovative organization; no ‘off-the-shelf’ package that drives new ideas,” says Gary Reader, KPMG International’s head of global insurance.

“Instead, organizations will need to navigate their own path through this new world of opportunity, developing new business and operating models and new partnerships in order to out-compete and out-innovate their peers and bold new entrants,” Reader emphasizes.

“Striking your own path for innovation does not mean starting from scratch,” says Trussell. “Instead, it is about leveraging experiences and successes, including the ideas of others to create new propositions and approaches to delight customers and create value. It’s about learning from both traditional competitors and new disruptors. And it’s about shamelessly borrowing best practices and new ideas from outside the insurance sector and its traditional allies.”