Accelerating the transformation through M&A

The global insurance industry is in a state of flux. In recent years, insurance companies have been grappling with the realities associated with geopolitical and economic uncertainties, demographic change, emerging risks and adapting to consumer behaviour.

Overall, these factors have led insurance companies to rethink their M&A and growth strategies and realign their business models - including their partnerships and alliance strategies - so that they can grow and succeed in a future that will be fundamentally different from the past.

This latest report provides key insights into global and regional M&A activity and trends. We explain influences on the insurance industry and present future business models that insurance companies should consider when reviewing and developing their M&A and growth strategies to meet the ever-increasing pace of transformation and changing customer needs.

The transformation in the industry will continue to accelerate over the next few years. Industry players will need to become more flexible and relevant from their customers' perspective - and differentiate themselves from the competition. In the search for ways to succeed in an uncertain world, leading insurance companies are likely to focus on a number of strategic initiatives that can be broadly categorised into four interrelated themes:

Organisations in the insurance industry will continue to rationalise their business and service portfolios. In this context, they will redefine their core business for the future, identify and evaluate adjacent markets, new value propositions and customer segments, re-evaluate existing products, brands and value propositions and identify and implement innovative revenue models. This transformation will be enabled and driven by M&A as well as partnerships and alliances.

The drive for greater speed, lower costs and greater efficiency through the use of automation and emerging technologies will lead to a further realignment of core services, competences and operating costs. Simplification of the operating model, digitalisation and optimisation goals in several larger insurance companies could result in the further outsourcing of components of the insurance industry value chain to cost-efficient managed services providers and business process solution providers within the insurance ecosystem - primarily through strategic alliances and partnerships.

In the insurance industry, the organisations that are most successful are those that involve their customers, employees, brokers, agents and other stakeholders most effectively. These industry players have a deep understanding of their stakeholders and their needs, desires, motivations and challenges. On this basis, they can shape interactions with stakeholders as well as relevant products and services. Acquisitions, partnerships and alliances that provide access to innovative technologies and services will be crucial for an improved customer experience and more effective stakeholder engagement.

Strategic partnerships within the insurance ecosystem will play a key role as organisations seek large-scale access to novel technologies, innovative services and new opportunities for differentiation. In this phase of transformation, companies may struggle to compete and maintain their market position, and collaboration as a differentiation strategy will become a competitive advantage.

The pressure to maintain momentum in a changing industry is expected to lead to an increase in M&A activity. Leading insurance companies will seek to realign their business models and utilise new types of technology to improve operational efficiency and create value for their stakeholders. They will also look for ways to better engage with customers to enhance the customer experience. At the same time, they will offer more targeted and relevant products and services to meet the diverse needs of different population groups in the regions in which they operate.

The team of experienced KPMG experts is there to support insurance companies on their journey. Using leading industry knowledge, in-depth M&A and strategy expertise, proprietary solutions and cutting-edge data and analytics, our experts provide clients with a fully integrated, multi-disciplinary approach that manages deal activity across multiple functions and the entire transaction process to gain unique insights into businesses and markets.