Strategic Partnerships Transforming the Insurance Industry
KPMG LLP leverages its multidisciplinary expertise and extensive industry insights to support insurers in addressing business challenges while capturing new opportunities. By aligning its structure with client-specific industry sectors, KPMG facilitates a profound understanding of operational environments and needs within the insurance sector.
Emerging Trends in Insurance Partnerships
The insurance industry is witnessing transformational changes in its approach to strategic partnerships. Insurers are prioritizing collaborations that foster innovation, manage complexities, and build internal capabilities that are hard to develop independently. A KPMG survey of insurance executives highlights that 64% plan to expand the use of external partners, reflecting a shift from cost reduction to strategic growth and capability enhancement.
Strategic Considerations
Insurance executives now base partnership decisions on project-specific needs, driven by regulatory compliance requirements (72%), risk management strategies (62%), and cost optimization (54%). This evolution signals a move from cost-driven decisions to those ensuring value through regulatory assurance and minimized operational risks.
Long-term Partnerships
The industry prefers sustainable, long-term partnerships over short-term alliances. Anam Khan, a Partner at KPMG in Bermuda, explains that insurers strive for deep alignment with partners to mitigate the costs and risks involved in frequent partner changes, ensuring partners evolve alongside changing needs.
Impacts of Technological Advances
Technological advancements in AI and automation shape strategic decisions significantly. Insurers value partners that provide innovative capabilities and enhance agile operations. Sean Vicente, U.S. Sector Leader for Insurance at KPMG LLP, emphasizes choosing partners that drive innovation and efficiency.
Insurers are increasingly open to outsourcing core activities like finance functions, reflecting growing confidence in partnership models. However, they remain cautious about intellectual property retention, balancing the need to leverage external expertise while securing internal ownership of developments.
Geographic Shifts
Geographically, insurers maintain partnerships across North America, Latin America, and Europe, with a growing focus on Asia, driven by talent availability and market expansion needs in the region.
Keys to Successful Partnerships
For successful partnerships, insurers must define their objectives clearly, whether it's reducing costs, accessing new capabilities, or accelerating innovation. Effective governance, service level agreements, and regular strategic reviews are crucial in adapting partnerships to evolving needs.
In response to the adoption of generative AI, insurers are fostering a learning culture to upskill their workforce. This involves not only technical training but also developing soft skills essential for innovation, such as critical thinking and problem-solving. Targeting high-value AI deployment enhances productivity and resource allocation to more valuable tasks.
Overall, partnerships in the insurance sector increasingly emphasize strategic, long-term benefits over traditional cost-focused approaches, driven by technological innovation and a nuanced understanding of global talent. As insurers navigate these changes, robust partnerships remain pivotal in achieving operational efficiency and innovation.