As the insurance market evolves and new challenges emerge, insurance leaders and decision-makers are looking to improve their organisation's agility, flexibility and cost base. The problem is that many insurance organisations 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.
Three key findings
- 75% of respondents expect to reduce costs by at least
10% by 2030
Anticipated cost savings are significant for insurance organisations. - 25% have been successful in achieving cost reduction
goals
Yet successful transformation has been a challenge.
- Only 41% considering themselves well-positioned to grow
revenues
Not all insurance organisations think they're ready.
On the surface, the insurance industry appears vibrant with organisations adopting new technologies and launching performance-enhancing programmes. But beneath this momentum lies a critical question: What sets the true leaders apart? How are high-performing insurance organisations achieving operational efficiency, cutting costs, and building sustainable performance in a rapidly evolving landscape?
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%) portfolio and infrastructure rationalisation (19%), skills
and capabilities (19%) and regulatory spend (18%).
Data from this recent survey suggests that — for many
insurance organisations — the approach to transformation is
leading to siloed initiatives and outcomes. Less than four in ten
respondents say that their transformation and cost efforts are
being executed through a centralised model where initiatives are
assessed, planned and prioritised at the enterprise level. And one
in five say they employ a 'hub-and-spoke' approach where
strategies are prioritised centrally but executed at a geographic
or functional level. This fragmented approach can lead to
inefficiencies, duplicated efforts, and missed opportunities,
ultimately limiting the full potential of transformation
programmes.
So, what are the most successful insurance organisations doing differently to achieve transformative outcomes?
Our research points to four key differentiators:
1、Clearly defined cost objectives
Insurers demonstrating successful transformation initiatives set specific, measurable cost goals that align with their broader business strategy.
2、Robust, dedicated budgets
Business leaders allocate sufficient resources to ensure transformation initiatives are well-funded and sustainable.
3、Alignment between cost and transformation goals
These organisations ensure that cost-saving efforts support—not hinder—their innovation and modernisation agendas.
4、Leadership accountability
Executive teams are directly responsible for delivering results, fostering a culture of ownership and performance.
We are seeing insurers spend significant sums on major technology projects such as modernising their core underwriting systems, for example. We have also seen a lot of investment flow into emerging technologies, often with mixed results in terms of true efficiency and effectiveness. Big technology budgets don't necessarily lead to big cost improvements.
Matthew Smith, Global Lead for Insurance Strategy and
Transformation, and Partner
KPMG in the UK
Five key takeaways
Transforming the insurance organisation 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 prioritisation and coordination. So here are five key takeaways to help insurance organisations 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 organisations 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.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
