Report claims insurers need technology revolution, not evolution

Technology-enabled insurance firms are threatening to take market share from slow moving established players, according to a new study by KPMG.

The report, entitled ‘Revolution, not Evolution’, claims many of those establish players were struggling with legacy insurance systems and it emphasised the need to drastic change.

A survey of the industry found that ‘technology’ and ‘customer demand’ were now the top two drivers of transformation for the insurance industry.

The report said: “Executives say they want evolution, not revolution. For now, they are focused on nurturing their existing business models while strategising about new ones, navigating shifting capital requirements worldwide, and using M&A primarily to access new markets and geographies.

“We firmly believe that those companies that defy the collective opinion of the industry will give themselves a clear competitive advantage. It all comes down to the pace of change. Evolution in this environment is too slow.”

The study, which looked at several aspects affecting the insurance industry, claimed the biggest threats to business models are ‘new regulations/ legislation’ and ‘losing share to lower-cost producers’.

The report found that customer service and data analytics were the highest priority investment areas in regards to technology - strategic acquisitions were said to be the highest priority investment area overall.