Digital, disruption and consumer demand

Digital, disruption and consumer demand

The past decade has been a period of unprecedented change for insurers and, according to our survey, there’s no end in sight to the tumultuous ride. Insurance executives say they expect to face a range of highly disruptive pressures on both their business models and their operating models in the coming years.


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Sources of disruption

When asked about the potential sources of disruption, insurance executives provided us with a broad and varied list. In addition to increased competition and threats from industry outsiders moving into the insurance space, more than one-third of respondents also said they expect government policy or enforcement agendas to disrupt their business models over the next three years. And 30 percent said they will be required to change their operating models as they struggle to balance the pressure for new growth versus the day-to-day reality of constrained budgets.

According to our survey results, however, there appears to be a blind spot when it comes to the disruptive pressures associated with customer behavior. While many of the executives in our survey talked about their push to make their organizations more customer-centric, less than 25 percent of them said they expect their operating models to be disrupted by changes in consumer behavior. The fact that so few insurers expect to be disrupted by changing demographics and consumer preferences suggests many of them may not have their eyes on the ultimate prize.

Where are insurers on the business transformation continuum?


Transformation continuum chart

The idea of organizational transformation is, of course, not new. In fact, more than a quarter of the companies surveyed said they had launched a major transformation project within the past 2 years. One-third said they have recently completed a transformation exercise. It is important to note, however, that despite the fact many of these insurers have undertaken initiatives that could be labeled ‘transformational’, there is a significant difference between conducting a transformational initiative and achieving a truly transformational outcome. 

“Customer behavior should actually be the inspiration behind insurers’ efforts to reinvent themselves,” note Mary Trussell, Global insurance innovation and change leader partner, KPMG in Canada.

Our experts agree that insurers will need to pursue and achieve change at a much more fundamental level if they hope to effectively transform themselves in the years ahead.

Case study: Preparing for digital health

Recognizing the ongoing shift towards e-Health and wearable devices, one of Europe’s largest health insurers wanted to assess their existing digital capabilities and understand how evolving customer preferences would impact their future capability mix.

Working with KPMG, the insurer worked to assess their digital maturity leveraging KPMG’s Digital Maturity Assessment methodology. The team then mapped their methodology to the customer experience pathway, allowing the organization to describe their required capabilities across more than 20 different categories. Ultimately, the insurer was able to define their optimal digital ecosystem, design the future state model for their IT organization, assess the impact of electronic patient information (such as electronic medical records) and develop a robust digital roadmap for the next four years.

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