28.09.2015 – For now, it seems unlikely that Apple or Google will make a dramatic entry into the insurance game in a significant way. But FinTech competitors are trying to undermine and disrupt the status quo, KPMG reports. Increased competition from these new entrants and more agile incumbents will continue to create challenges for insurers around the world. And it is not just start-ups that are creating innovation challenges.
While not surprising, 65 percent of respondents of a current KPMG report cited regulation as their organizations greatest challenge. Many of the clients interviewed felt the overly arduous regulatory requirements are narrowing the room for innovation in the sector, and indeed they may lead to unintended consequences. Additional challenges over the next two years include high cost, margin erosion (45%) and growing business and organizational complexity (37%).
“We can’t wait for the structural changes to occur before we start moving, we need to address these changes now if we hope to offer the business new growth opportunities over the next 5 years”, Thomas Blunck from Munich Re says.
Interestingly, respondents from North America were significantly more likely to say they had experienced disruption than their European peers and somewhat more likely to do so than their Asian peers. Similarly, respondents from the Property and Casualty (P&C) sector were more than twice as likely as their Life and Health peers to suggest they would face disruption from new competitors.
Actions to consider:
1. Analyze your organizations weak points, and develop strategies to defend and protect these business lines.
2. Build flexibility and agility into innovation strategies and processes so you can quickly respond to new competitive threats and opportunities.
3. Don’t resist every new competitor, consider how you might work with or aquire innovators to improve competitive advantage.
4. Consider alliances with partners outside of the insurance industry.
5. Continually scan the horizon for new competitors and FinTech players that you may want to partner with. (vwh/mst)
Picture: Thomas Blunck, Board Director Munich Re (Source: Munich Re)