Insurance transformation

As the insurance market evolves and new challenges emerge, insurance leaders and decision-makers are looking to improve their organization’s agility, flexibility and cost base. The problem is that many insurance organizations have historically struggled to achieve their transformation and cost objectives, with only 25% of transformation initiatives considered highly successful. This report aims to explain why and, more importantly, how the leading insurers are successfully delivering on their goals.

Based on a recent survey of more than 250 insurance leaders globally and supported by insights from KPMG’s global network of insurance professionals and industry leaders from Empire Life and Covéa Insurance, this report explores the objectives, opportunities and complexities influencing insurance transformation. And it digs into the success factors that are driving the most advanced insurers as they strive for operational and cost transformation. 

On the surface, the insurance industry appears vibrant with organizations 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 organizations achieving operational efficiency, cutting costs, and building sustainable performance in a rapidly evolving landscape?

1. Anticipated cost savings are significant for insurance organizations. 
   75% of respondents expect to reduce costs by at least 10% by 2030 
    
2. Yet successful transformation has been a challenge. 
   25% have been successful in achieving cost reduction goals 
    
3. Not all insurance organizations think they’re ready 
   Only 41% considering themselves well-positioned to grow revenues.

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 percent) portfolio and infrastructure rationalization (19 percent), skills and capabilities (19 percent) and regulatory spend (18 percent).

Our survey also highlights that insurance leaders are seeking transformative outcomes over cost savings. As a result, it appears that insurers are measuring the success of their transformation and cost initiatives based on realized productivity gains, risk reduction metrics and quality improvements.

So, what are the most successful insurance organizations doing differently?

• They have clearly defined cost objectives 
• They have earmarked robust budgets 
• Their cost and transformation objectives are aligned 
• They have made leadership accountable

Transforming the insurance organization 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 prioritization and coordination. So here are five key takeaways to help insurance organizations 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 organizations 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 realize 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.