COVID-19 has disrupted insurance industries across the globe, but of the 129 insurance CEOs surveyed for KPMG’s annual Global CEO Outlook, there’s an emerging optimism driven by a focus on innovation and a strong connection to organizational purpose which is building confidence in growth for the industry.
The road to renewal
Global insurance CEOs have a renewed confidence in the growth prospects of their organizations, the insurance sector and the global economy. Leaders in insurance expect aggressive growth and are looking to expand their businesses and organizations in new ways.
As insurance CEOs look forward, a key focus will be embedding purpose into the fabric of their organizations and in return providing long-term value to customers, employees and stakeholders.
Growth prospects picking up
Despite continued uncertainty as a result of the pandemic, most insurance CEOs (93 percent) are confident about the growth prospects of their organizations — a positive shift from this time last year (88 percent). This growth is expected to continue, with 84 percent optimistic about the growth of the insurance industry in the next three years. And this optimism is expected to translate into growth, globally.
Shifting risks agenda
Business leaders are recognizing a drastic shift in emerging threats to their organizations, fueled by unprecedented pandemic-related risks and new regulations or modifications to existing laws. Among these emerging concerns are regulatory, tax, reputational/brand and cyber-security risks — with regulatory and tax as the biggest threats to long-term growth for the industry.
Strategies for growth
As insurance CEOs look to react quickly to how markets have changed — particularly digital driven changes in consumer preferences — they believe that their inorganic strategies will be key to achieving their growth ambitions. Adapting to the changing trends is the primary focus.
To achieve their long-term objectives, CEOs have their sights set on technology upgrades and innovation as key focus areas to pursue growth. Sixty-eight percent plan to increase investments in disruption detection and innovation processes, because of accelerated digitization in the industry. Many leaders recognize that this shift will lead to the development of new innovative technologies with a goal of increasing resources and reducing cost.
Guided by purpose
Stakeholder expectations have evolved, and leaders are under increased scrutiny to act. Insurance CEOs recognize the importance of having a clear purpose for their organizations to move ahead on the growth path.
Seventy-six percent of insurance CEOs feel a stronger connection to their organization’s purpose since COVID-19 began. Driving value that stems from this purpose and embedding it in their business and operating models will play a vital role, with 73 percent saying they’re using corporate purpose to drive action in addressing the needs of key stakeholders.
Collaborating to power sustainability
Action to limit climate change and reduce carbon emissions in the race to net zero is crucial now more than ever. Progress that addresses sustainability issues will require strong collaboration between businesses and stakeholders. Failure to address sustainability can impact the bottom line and may result in disengagement from the public and employees. A strong commitment to collaboration is equally important from government with 74 percent of CEOs suggesting that government stimulus is required to turbocharge climate investments being made by the business community.
Connecting ESG strategy with financial returns
With newly found connections between environmental, social and governance (ESG) issues and financial returns, CEOs are taking into consideration the impact of ESG investments — 40 percent believe that ESG programs have a positive impact on financial performance. Seventy-seven percent are looking to lock in the sustainability and climate change gains made during the pandemic, and 81 percent are shifting their focus to the social component of their ESG program.
Adapting to new realities
CEOs are recognizing the demands created by a rapidly evolving future of work. The core focus is on providing flexibility to the workforce.
With returning to places of work and governments increasingly looking for businesses to lead a return to normal, insurance CEOs have indicated a focus towards investing in digital tools and preparedness for a hybrid work environment that offers flexibility. Sixty-three percent of insurance CEOs are recognizing the demands created by rapidly evolving ways of working and will be looking to invest in shared office spaces — whereas only 19 percent plan to downsize (or have already downsized) their physical footprint or office spaces. In addition, 51 percent said their organization will have most employees working remotely at least two or more days a week.
Engaged, motivated and productive employees
With a hybrid work environment becoming increasingly common it is important for insurers to come up with ways to keep employees motivated. Forty-seven percent of insurance CEOs believe it is important to address big issues such as climate changes, racism and rising inequality as it brings a sense of togetherness in the workforce and 44 percent intend to focus on employee mental health and well-being.
Top of the CEO agenda
KPMG’s 2021 CEO Outlook highlights a new sense of optimism in the boardroom. CEOs feel a strong connection to their organization’s purpose and are looking to expand their business to emerge stronger than ever before.
There’s a need for sustainable transformation that encourages long-term growth and the insurers of the future will need to be agile and innovative, while collaborating with stakeholders to ensure resilience and continue on their paths to growth.
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