For more information on the KPMG CEO Outlook 2016 report, please visit https://home.kpmg.com/us/en/home/insights/2016/06/us-ceo-outlook-2016-its-now-or-never.html. For a breakdown of the results from the responses of insurance CEOs, please visit: https://assets.kpmg.com/content/dam/kpmg/us/pdf/2016/11/embrace-change-in-changing-times-insurance-ceo-outlook.pdf.
Insurance CEOs polled by KPMG expressed optimism about their companies' and the industry's growth prospects over the next 3 years. However, CEOs indicate that growth will be accompanied by increasing risks, with cybersecurity being their biggest concern followed by regulatory and geopolitical risk.
Cybersecurity – Devoting Resources in Next 3 Years; a Business Opportunity for Insurers
Cybersecurity is at the top of the list of the areas insurance CEOs plan to devote significant investment/resources to in the next 3 years. Only 27 percent of insurance CEOs say they are fully prepared for a cyber event, while 66 percent say they are somewhat prepared.
"In this highly connected world, enhancing cybersecurity tools and practices has become essential for insurance companies," said Matt McCorry, Insurance Advisory Leader, KPMG. "To effectively address this challenge, insurance CEOs need to make cybersecurity a strategic priority and invest time, resources and talent to proactively prevent breaches. Cyber attacks could have severe ramifications on their companies' business and their customers."
Cybersecurity, on the other hand, is creating a business opportunity for insurers as they are looking to launch new products to protect businesses from cyber events, according to another KPMG report: Cyber insurance: Growth, risk and uncertainty reign.
"Although cyber insurance may present a new market opportunity, insurers grapple with questions about how to gather lost data, calculate cyber exposure, structure coverage and price products," added McCorry.
Insurance M&A activity and Hiring of New Talent
To accelerate the execution of their strategies, insurance CEOs also indicated they are hiring new talent and that acquisitions, joint ventures and partnerships are among their top strategic priorities.
In fact, nearly 30 percent of insurance CEOs expect to be involved in some form of merger while 37 percent are considering acquisitions over the next 3 years. These transactions ensure the rapid acquisition of new skills for the improvement in the competitive position of each insurance company.
"Acquisitions, partnerships or divestitures are effective ways for many companies to quickly acquire new technologies and capabilities necessary to thrive in this unprecedented transformation of the insurance industry," added Hay.
About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 174,000 professionals, including more than 9,000 partners, in 155 countries.
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SOURCE KPMG LLP