Over a quarter of industry’s CEOs see environment/climate change as biggest threat
All of the U.S. insurance chief executive officers polled in KPMG’s 2019 CEO Outlook survey are confident about the growth prospects of their companies in the next three years, as technological innovations that improve customer engagement, lower costs and provide better insights may unlock significant growth.
“CEOs said that meaningful growth in insurance is possible only if companies are agile and innovative enough to meet changing customer expectations, while slow movers will be left behind,” said Ed Chanda, Insurance Sector Leader, KPMG LLP. “A good example is automated underwriting that allows for better decisions, lowers the burden on the customer and lowers cost; potentially opening the market for the underwriting of smaller risks.”
In terms of the greatest risk to this optimism, 27 percent of CEOs identified environmental/ climate change risk as the biggest threat due to the increasing frequency of intense catastrophes, particularly wildfires and tornados.
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Increased Confidence in the Use of Cloud Technologies
The key to agility and innovation is the use of cloud technologies, with many CEOs (82%) feeling more confident with their use today than they were in the past three years. Seventy-five percent also said that they are placing more capital investment behind new technologies to improve their organization’s resilience.
“CEOs are increasingly confident with the use of cloud technologies. However, the implementation of these transformative technologies, which can power artificial intelligence and greater analytic capabilities across the entire enterprise, should come from the top to overcome institutional resistance; otherwise it might not work,” added Chanda.
Eighty-eight percent of CEOs said that they are personally leading the technology strategy for their organization, and the majority expect to see a significant return on investment from digital transformation programs and robotic process automation within one to three years. Fifty-two percent also expect to see a significant return on investment from artificial intelligence within three to five years.
Cyber Attacks Remain a Real Threat
The use of cloud technologies brings with them concerns about cyber threats. Sixty-two percent of CEOs said that protecting their customers’ data is one of their most important responsibilities, leading to the majority (78%) having concerns about migrating all of their businesses’ data to the cloud.
Sixty-eight percent also agreed that a strong cyber strategy is critical to engender trust with their key stakeholders. They view information security as a strategic function and a potential source of competitive advantage.
AI and Robotics Technologies to Create More Jobs
The majority of CEOs (73%) said that over the next three years, AI and robotics technologies will create more jobs than they will eliminate.
“Insurers need to take steps to make their workforce future ready,” said Chanda. “Employees must be prepared if they are to understand the capabilities of these new systems and their role in them.”
In the next three years, the majority of CEOs (77%) are planning to up-skill 41-60 percent of their organizations’ workforce in new digital capabilities, such as advanced data visualization and code.
KPMG’s 31st Annual Insurance Industry Conference
Changing customer behaviors, emerging technologies, regulatory changes, new competitors and much more will be discussed and analyzed by senior insurance executives and thought leaders at KPMG’s 31st Annual Insurance Industry Conference on September 10-11 at the New York Marriott Marquis. To register, please click here.
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